Largely because of the recent development of new experimental models, cholangiocytes--the cells lining the bile ducts--are now recognized as important contributors to and modulators of bile formation. Recent work elucidating the mechanisms and regulation of fluid, solute, and electrolyte transport indicates that the biliary epithelium influences bile formation through both autocrine and paracrine mechanisms. Novel roles for bile acids in cholangiocyte physiology have been proposed, and insight into the anatomic and functional differences of cholangiocytes along the biliary tree has been gained. Improved understanding of these concepts and the pathophysiologic response of the biliary tree to injury should provide new therapies for biliary diseases.