The influence of phalloidin, an agent that causes irreversible polymerisation of actin into microfilaments, on bile secretion and hepatocyte ultrastructure was examined in rats. Phalloidin was given intraperitoneally at the dose of 50 microgram per 100 g of body weight per day for 1, 3, or 7 days. The following was observed. (1) Bile flow decreased, as compared to controls, by 19% after 1 day, 34% after 3 days, and 55% after 7 days. Bile acid secretion was also decreased. (2) Electron microscopic examination of the hepatocyte in treated animals revealed an increased thickness of the pericanalicular microfilamentous network and a dilatation of bile canaliculi. Stereological examination revealed an increase in the relative volume of the microfilamentous network (per unit of hepatocyte cytoplasm) of 2.55% after 1 day, 4.06% ater 3 days, and 6.16% after 7 days. (3) [14C]Erythritol biliary clearance, measured after 7 days, decreased in parallel to bile flow, suggesting that the decrease in bile flow was of canalicular origin. [14C]Sucrose biliary clearance increased in treated animals, suggesting an increased permeability of the biliary system to sucrose. There was a predominant decrease in the bile acid independent bile flow. These data provide circumstantial evidence for the hypothesis that microfilament dysfunction can produce cholestasis.