Primary biliary cirrhosis (PBC) recurs in the allograft after liver transplantation. Study of early tissue changes in the time‐course of disease recurrence provides a unique insight into the initial stages of the disease process, which, in nontransplant patients, occurs long before clinical presentation. We describe a patient who developed classical clinical, biochemical, immunological, and histological features of PBC within 9 months after transplantation. Use of tissue from this patient before and during the development of PBC allowed us to identify biliary epithelial cell (BEC) epithelial‐mesenchymal transition (EMT) as a key pathogenetic process. BEC expression of S100A4 (an early fibroblast lineage marker established as a robust marker of EMT), vimentin, and pSmad 2/3 [a marker of transforming growth factor beta (TGF‐β) pathway signaling] were identified immunohistochemically in most BECs in liver tissue from this patient at the point of diagnosis of recurrent disease. BEC expression of S100A4 and pSmad 2/3 was seen as early as 24 days after orthotopic liver transplantation (OLT), although no other features of recurrent PBC were present at this time. Conclusion: S100A4, vimentin, and pSmad 2/3 expression in early recurrent PBC after OLT suggests that BEC EMT is occurring (potentially explaining BEC loss) and that this process is driven by TGF‐β. S100A4 expression by BEC appears to occur before the development of any other features of recurrent PBC, suggesting that EMT may be an initiating event. (HEPATOLOGY 2007;45:977–981.)