Background No information is available on the hepatic and extrahepatic pathways of bile acid synthesis in normal children and in pediatric cholestatic liver diseases. Methods To explore the changes of the two pathways of bile acid synthesis during development, plasma concentrations of 7α-hydroxycholesterol and 27-hydroxycholesterol were measured in 50 healthy children (1 month–14 years) and compared to 18 adult controls. We also measured plasma oxysterols in 31 patients with pediatric cholestatic liver disease. Results A progressive increase of plasma concentrations of both 27-hydroxycholesterol and 7α-hydroxycholesterol was found with age. In children with cystic fibrosis-associated liver disease plasma concentrations of 27-hydroxycholesterol were significantly lower compared to age-matched controls (5.6 ± 0.5 vs. 12.8 ± 1.1 μg/dl; p < 0.001) and paralleled significantly lower concentrations of total cholesterol. In infants with biliary atresia plasma concentrations of 27-hydroxycholesterol were significantly higher compared to age-matched controls (8.8 ± 0.8 vs. 4.4 ± 0.6 μg/dl, p < 0.001) paralleling significantly higher concentrations of total cholesterol while 7α-hydroxycholesterol resulted significantly lower (1.2 ± 0.2 vs. 2.3 ± 0.3 μg/100 mg of total cholesterol; p = 0.011). Conclusions Our data suggest that both pathways of bile acid synthesis reach a state of maturity only after the age of 4 years and are significantly influenced also in children by liver function and intestinal absorption of cholesterol.