Autoimmune hepatitis (AIH) is characterized by chronic inflammation of the liver, interface hepatitis (based on histologic examination), hypergammaglobulinemia, and production of autoantibodies. Many clinical and basic science studies have provided important insights into the pathogenesis and treatment of AIH. Transgenic mice that express human antigens and develop autoantibodies, liver-infiltrating CD4⁺ T cells, liver inflammation, and fibrosis have been developed as models of AIH. AIH has been associated with autoantibodies against members of the cytochrome P450 superfamily of enzymes, transfer RNA selenocysteine synthase, formiminotransferase cyclodeaminase, and the uridine diphosphate glucuronosyltransferases, whereas alleles such as DRB1*0301 and DRB1*0401 are genetic risk factors in white North American and northern European populations. Deficiencies in the number and function of CD4⁺CD25⁺ (regulatory) T cells disrupt immune homeostasis and might be corrected as a therapeutic strategy. Treatment can be improved by continuing corticosteroid therapy until normal liver test results and normal liver tissue are within normal limits, instituting ancillary therapies to prevent drug-related side effects, identifying problematic patients early, and providing long-term maintenance therapy after patients experience a first relapse. Calcineurin inhibitors and mycophenolate mofetil are potential salvage therapies, and reagents such as recombinant interleukin-10, abatacept, and CD3-specific antibodies are feasible as therapeutics. Liver transplantation is an effective salvage therapy, even in the elderly, and AIH must be considered in all patients with graft dysfunction after liver transplantation. Identification of the key defects in immune homeostasis and antigen targets will direct new therapies.