Jaundice in patients with amoebic liver abscess is a frequent occurrence. However, the pathophysiology of jaundice in these patients is not fully understood. Hepatic necrosis leads to damage to bile ducts as well as various vascular structures, which in turn leads to biliovascular fistula and jaundice. We studied the mechanism of jaundice in patients with amoebic liver abscess. We prospectively evaluated 12 patients with amoebic liver abscess and jaundice from February 2002 to August 2007. All patients underwent various investigations, including imaging studies. There were 11 males and 1 female patient with a mean age of 41.3 years. Mean duration of illness before presentation was 13.8 days. All patients had fever and jaundice. We detected damaged hepatic veins and bile ducts in all patients with amoebic liver abscess causing biliovascular fistula and hyperbilirubinemia, which reverted to normal after biliary diversion with nasobiliary drainage. Jaundice in patients with amoebic liver abscess is caused by biliovascular fistula resulting from hepatic necrosis leading to damage to bile ducts and hepatic veins.