Nuclear receptors (NRs) are ligand-activated transcriptional factors that are involved in various physiological, developmental, and toxicological processes. Farnesoid X receptor (FXR) is a NR that belongs to the NR superfamily. The endogenous ligands of FXR are bile acids. FXR is essential in regulating a network of genes involved in maintaining bile acid and lipid homeostasis. It is clear that FXR is critical for liver and intestinal function. In mice FXR deficiency leads to the development of cholestasis, gallstone disease, nonalcoholic steatohepatitis, liver tumor, and colon tumor. Using mouse models where FXR is deleted either in the whole-body, or selectively in hepatocytes or enterocytes, we start to reveal the importance of tissue-specific FXR function in regulating bile acid and lipid homeostasis. However, a great challenge exists for developing tissue-specific FXR modulators to prevent and treat diseases associated with bile acid or lipid disorders. With further understanding of FXR function in both rodents and humans, this nuclear receptor may emerge as a novel target to prevent and treat liver, gastrointestinal and systemic diseases.