Production of bile by the liver is crucial for the absorption of lipophilic nutrients. Dysregulation of bile acid homeostasis can lead to cholestatic liver disease and endoplasmic reticulum (ER) stress. We show by global location analysis ('ChIP-on-chip') and cell type–specific gene ablation that the winged helix transcription factor Foxa2 is required for normal bile acid homeostasis. As suggested by the location analysis, deletion of Foxa2 in hepatocytes in mice using the Cre-lox system leads to decreased transcription of genes encoding bile acid transporters on both the basolateral and canalicular membranes, resulting in intrahepatic cholestasis. Foxa2-deficient mice are strikingly sensitive to a diet containing cholic acid, which results in toxic accumulation of hepatic bile salts, ER stress and liver injury. In addition, we show that expression of FOXA2 is markedly decreased in liver samples from individuals with different cholestatic syndromes, suggesting that reduced FOXA2 abundance could exacerbate the injury.