The development of bile acid synthesis, secretion and absorption was studied in laboratory animals and humans. Although there is species variation, a developmental pattern emerges. Bile acid pool size and synthesis rates increase during the final third of gestation and the perinatal period. Similarly, bile acid secretion is a developing function during the final third of gestation and is incompletely developed at birth. The ileal mechanism for active bile acid transport is absent at birth and only develops during the first 2--5 weeks or more of life. It is therefore possible that the intestinal conservation of bile acid is ineffective in the newborn. The combination of immaturity of bile acid synthesis, secretion and absorption probably contributes to the fat malabsorption especially evident in low birth weight infants. Finally, synthesis, secretion and absorption can be induced to develop early by the administration of adrenocortical steroid. The induction of mechanisms for bile acid metabolism raises the possibility of therapeutic intervention in severe cases of neonatal malabsorption of lipid.