The biliary tree of the liver is a system of ducts that transport bile out of the liver to the duodenum. The ducts are lined by epithelial cells (cholangiocytes) which actively modify bile by secreting or absorbing solutes and water using transporters, exchangers, channels, and receptors, and by processes such as endocytosis, exocytosis, and pinocytosis. Cholangiocyte function is regulated by hormones, neurotransmitters, growth factors, bile acids, osmosensors, and mechanoreceptors. In man, bile is stored and concentrated in the gallbladder for secretion during digestion. In numerous vertebrates, however, a gallbladder is lacking. Thus, storage/concentration of biliary constituents is not a requirement for normal biliary function. Cholangiocyte physiology is studied in vivo using bile-duct cannulated animals and in vitro using freshly isolated cholangiocytes, cholangiocyte monolayers, cell lines, and isolated bile duct units. Cholangiocytes express phase I and II enzymes plus cholangiocyte-specific proteins. Additionally, receptors and transport proteins are differentially expressed by cholangiocytes from large versus small ducts.Liver architecture and volume is restored following moderate injury or resection via a cascade of cytokines and growth factors that induces proliferation of all liver cell types. In contrast, a stem cell compartment (oval or progenitor cells) begins to proliferate following massive or chronic liver injury, which induces a variable 'ductular reaction' correlated with the degree of inflammation and fibrosis. Diseases of the biliary tree (cholangiopathies) are collectively termed 'vanishing bile duct syndromes,' due to progressive destruction of intra- and extrahepatic bile ducts. Primary biliary cirrhosis (PBC) and primary sclerosing cholangitis (PSC) are the most prevalent immune-mediated cholangiopathies. Proposed etiology of PBC is formation of 'neo-antigens' (chemically modified lipoyl domains of mitochondrial matrix proteins) that elicit immunogenic autoepitopes via chronic low-level protein turnover (i.e., breakdown of tolerance). New knockout mouse models suggest that PSC is caused by elevations of cytotoxic bile acids in ductular bile and/or leaky tight junctions (TJ) leading to cholangiocyte injury, portal tract inflammation, and peribiliary fibrosis. Proposed etiologies for drug-induced cholangiocyte injury are direct cytotoxicity by drugs or their reactive metabolites, or initiation of an immune-mediated (drug hypersensitivity) response that targets cholangiocytes. Genetic and environmental risk factors identified for PBC and PSC include certain human leukocyte antigen (HLA) alleles, urban living, and proximity to superfund toxic waste sites (i.e., environmental toxicants); risk factors for drug-induced cholangiopathies include HLA alleles, gender, age, dose, number of courses of therapy, and concomitant viral infection. Although knowledge of cholangiocyte physiology and function has been considerably improved in the last 10 years, critical insight into the mechanisms by which cholangiopathies occur continues to elude investigators.