Cholestatic liver disorders account for a large proportion of chronic liver ailments in adults, children and infants, and are among the leading indications for liver transplantation in all age groups. Recent studies have begun to characterize the cellular and molecular mechanisms of hepatocyte injury caused by the retention of hydrophobic bile acids in cholestasis. Steatocholestasis is the combined presence of hepatic steatosis and cholestasis, common in genetic causes of metabolic liver disease in childhood. Retention of hydrophobic bile acids promotes hepatocellular injury and subsequent portal fibrosis in these conditions. Investigations at the mechanistic level have revealed that activation of hepatocyte death receptors, induction of oxidative stress, mitochondrial perturbations and activation of caspases are intracellular pathways that mediate hepatocyte injury. Several compounds in licorice root have been shown to modulate bile acid-induced apoptosis and necrosis of hepatocytes. Further investigations will be needed to identify novel molecular and cellular targets for which pharmaceuticals might be developed, to reduce liver injury and fibrosis in cholestasis and steatocholestasis.