The Notch signaling pathway is involved in determination of cell fate and control of cell proliferation in multiple organ systems. Jag1 encodes a ligand in the Notch pathway and has been identified as the disease‐causing gene for the developmental disorder Alagille syndrome. Evidence from the study of human disease and mouse models has implicated Jag1 as having an important role in the development of bile ducts. We have derived a conditional knockout allele (Jag1^loxP) to study the role of Jag1 and Notch signaling in liver and bile duct development. We crossed Jag1^loxP mice with a transgenic line carrying Cre recombinase under the control of the albumin promoter and α‐fetoprotein enhancer to ablate Jag1 in hepatoblasts. The liver‐specific Jag1 conditional knockout mice showed normal bile duct development. To further decrease Notch pathway function, we crossed the Jag1 conditional knockout mice with mice carrying the hypomorphic Notch2 allele, and bile duct anatomy remained normal. When Jag1 conditional mice were crossed with mice carrying the Jag1 null allele, the adult progeny exhibited striking bile duct proliferation. Conclusion: These results indicate that Notch signaling in the liver is sensitive to Jag1 gene dosage and suggest a role for the Notch pathway in postnatal growth and morphogenesis of bile ducts. (HEPATOLOGY 2007.)