Despite recent improvements in immunosuppressive therapy, hepatic allograft rejection remains a major cause of morbidity and late graft loss in patients undergoing liver transplantation. Although some biochemical tests suggest hepatic allograft damage, the gold standard for defining rejection remains based on morphologic findings. Acute cellular rejection usually occurs within the first 3 weeks posttransplantation and the incidence varies between 40% and 70%. Ductopenic rejection occurs in 5-10% of patients undergoing initial liver transplantation and usually occurs between 6 weeks and 6 months after the procedure. Induction and maintenance of immunosuppression with triple-drug therapy (cyclosporine, prednisone, and azathioprine) and other combinations that include anti-lymphocyte preparations have led to an overall decrease in the incidence of both cellular and ductopenic rejection. In addition, the availability of FK506 as a rescue therapy has saved grafts in some patients experiencing chronic (ductopenic) rejection. Overall, the correlation between the degree of biochemical liver dysfunction and the presence and severity of histologic rejection remains poor. Histologic severity of rejection, however, suggests which patients will require more immunosuppressive therapy and which patients may need antilymphocyte therapy to control the rejection episode. Some rejection episodes remain resistant to all known therapy and eventually lead to graft loss. New immunosuppressive agents and regimens are needed to improve graft and patient survival, decrease the incidence of cellular and ductopenic rejection, minimize drug-related side effects and complications, and reduce the high cost of immunosuppressive therapy.