The biosynthesis of bile acids in mammalian liver and its regulation, together with the physiological role of bile acids, are reviewed in this article. Bile acids are biosynthesized from cholesterol in hepatocytes. Several steps are involved including epimerisation of the 3beta-hydroxyl group, reduction of the delta4 double bond to the 5beta-H structural arrangement, introduction of alpha-hydroxyl groups at C7 or C7 and C12 and, finally, oxidative degradation of the side chain by three carbon atoms. This gives the primary bile acids, cholic and chenodeoxycholic acids. Cholesterol-7alpha-hydroxylation is the rate determining step in the biosynthesis of cholic and chenodeoxycholic acids. Feedback regulation of cholesterol biosynthesis occurs by various mechanisms including termination of the synthesis of specific cytochromes P-450, modulation of specific cytosol proteins, short-term changes in the process of phosphorylation-dephosphorylation and changes in the capacity of the cholesterol pool as a substrate. Prior to being exported from the liver, bile acids are conjugated with glycine and taurine to produce the bile salts. After excretion into the intestinal tract, primary bile acids are partly converted to secondary bile acids, deoxycholic and lithocholic acids, by intestinal microorganisms. The majority of bile acids is absorbed from the intestinal tract and returned to the liver via the portal blood, so that only a small fraction is excreted in the feces. Bile acids returned to the liver can be reconjugated and reexcreted into the bile in the process of enterohepatic recycling. In addition to the physiological function of emulsifying lipids in the intestinal tract, bile acids are particularly important in respect of their ability to dissolve and transport cholesterol in the bile.