Primary biliary cirrhosis (PBC) is a chronic, progressive disorder characterized by destruction of small and medium-sized bile ducts within the liver. Current evidence suggests that liver damage in this condition may occur via immunological and nonimmunological mechanisms. The immunological element is mediated by activated T lymphocytes, which are directed toward biliary epithelial cells. Destruction of biliary epithelium may lead to impaired secretion and subsequently increased concentrations of hydrophobic, toxic bile acids in the microenvironment of the hepatic lobule. These bile acids may in turn damage hepatocyte membranes and may also exacerbate secondary reactive immune-mediated destruction of both bile ducts and hepatic parenchyma. Long-standing inflammation may lead to hepatic fibrosis and, ultimately, cirrhosis. Although a variety of agents have been used to treat PBC with variable efficacy, the most promising treatment regimens appear to be those that combine an immunomodulatory agent, such as methotrexate, with a water-soluble bile salt, such as ursodeoxycholic acid. Colchicine, which may modulate cytokine activity and decrease fibrosis, may also have a role in treatment. Because PBC is a chronic, slowly progressive disease, long-term treatment trials, such as those currently under way, will be needed to assess the real benefit of such regimens. Meanwhile, liver transplantation has an excellent success rate in patients with advanced PBC, and should be used in patients with decompensated liver disease.