The biliary epithelium of the liver is a system of interconnecting ducts that transport bile out of the liver to the duodenum. The bile 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. Gastrointestinal hormones, neurotransmitters, growth factors, bile acids, osmosensors, and mechanoreceptors regulate cholangiocyte function through multiple, complex pathways and mechanisms. Cholangiocyte pathophysiology is studied in vivo using bile duct cannulated animals and cholestatic models of primary biliary cirrhosis and primary sclerosing cholangitis and in vitro using freshly isolated intrahepatic and extrahepatic cholangiocytes, cholangiocyte monolayers, cell lines, and isolated intrahepatic bile duct units. Cholangiocytes express phase I and II enzymes as well as cholangiocyte-specific proteins. Additionally, receptors and transport proteins are differentially expressed by cholangiocytes of different sizes lining small and large ducts, respectively.Liver architecture and volume is restored following moderate injury or resection by a cascade of cytokines and growth factors inducing the 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). 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, the pathogenesis of cholangiopathies continues to remain elusive.