Syndromatic paucity of interlobular bile ducts is a common cause of conjugated hyperbilirubinemia in children. The clinical presentation is not always obvious. Therefore, the liver biopsy may be a useful diagnostic tool in the definition of this entity. The hepatic and biliary morphology of five children with arteriohepatic dysplasia (Allagille' syndrome) is described. Prior to diagnosis, four underwent Kasai procedures after intraoperative cholangiograms failed to demonstrate patency of the extrahepatic bile ducts. In three patients, a focal proximal hypoplasia of the common hepatic duct was demonstrated. Hypoplasia of the gallbladder occurred in two patients. Hepatic features of sequential liver biopsies obtained on the five patients, were divided into early and late changes. From birth to four months of age, the pathology consistent of cholestasis, paucity of interlobular bile ducts and portal fibrosis. The etiology of arteriohepatic dysplasia is unclear. The main pathogenic mechanisms are discussed. It is felt that the syndromatic duct paucity represents an acquired primary ductal defect resulting from a genetically determined immune response to as yet undefined agent or agents.