Since 1974, 16 consecutive infants with biliary atresia have been treated by hepatic portoenterostomy employing an exteriorized Roux-en-Y intestinal segment (Miluliez). Simultaneous, sequential analyses of bile pigments and lipids in serum and biliary drainage were performed. In the 11 patients with sustained bile drainage, progressive increases in bile volume, bilirubin and biliary lipid concentrations correlated well with their subsequent return toward normal in the serum. Despite relief of biliary obstruction, four patients have had progressive liver cirrhosis. The other 7 have residual liver damage which has been stable, or in two instances, improved, at late biopsy. The clinical and biochemical results suggest that both obstructive and parenchymal factors are operative in infants with biliary atresia.