With the widespread development of new drugs to treat chronic liver diseases (CLDs), including viral hepatitis and nonalcoholic steatohepatitis (NASH), more patients are entering trials with abnormal baseline liver tests and with advanced liver injury, including cirrhosis. The current regulatory guidelines addressing the monitoring, diagnosis, and management of suspected drug-induced liver injury (DILI) during clinical trials primarily address individuals entering with normal baseline liver tests. Using the same laboratory criteria cited as signals of potential DILI in studies involving patients with no underlying liver disease and normal baseline liver tests may result in premature and unnecessary cessation of a study drug in a clinical trial population whose abnormal and fluctuating liver tests are actually due to their underlying CLD. This position paper focuses on defining best practices for the detection, monitoring, diagnosis, and management of suspected acute DILI during clinical trials in patients with CLD, including hepatitis C virus (HCV) and hepatitis B virus (HBV), both with and without cirrhosis and NASH with cirrhosis. This is one of several position papers developed by the IQ DILI Initiative, comprising members from 16 pharmaceutical companies in collaboration with DILI experts from academia and regulatory agencies. It is based on an extensive literature review and discussions between industry members and experts from outside industry to achieve consensus regarding the recommendations. Key conclusions and recommendations include (1) the importance of establishing laboratory criteria that signal potential DILI events and that fit the disease indication being studied in the clinical trial based on knowledge of the natural history of test fluctuations in that disease; (2) establishing a pretreatment value that is based on more than one screening determination, and revising that baseline during the trial if a new nadir is achieved during treatment; (3) basing rules for increased monitoring and for stopping drug for potential DILI on multiples of baseline liver test values and/or a threshold value rather than multiples of the upper limit of normal (ULN) for that test; (4) making use of more sensitive tests of liver function, including direct bilirubin (DB) or combined parameters such as aspartate transaminase:alanine transaminase (AST:ALT) ratio or model for end-stage liver disease (MELD) to signal potential DILI, especially in studies of patients with cirrhosis; and (5) being aware of potential confounders related to complications of the disease being studied that may masquerade as DILI events.