Cholestasis results from either failure of bile formation or obstruction to bile flow. Liver diseases characterized by chronic cholestasis frequently cause progressive hepatocellular injury, cirrhosis, and death. Recent studies have shown that bile salts have an important role in the genesis and maintenance of liver injury in chronic cholestatic liver diseases. Ursodeoxycholic acid, a unique bile acid, protects the liver from injury by harmful bile acids and has been shown to improve symptoms and to delay the onset of liver failure and complications of cirrhosis. The rationale for its use and the results from clinical trials in chronic cholestasis are reviewed. Recommendations for the use of ursodeoxycholic acid in chronic cholestatic liver diseases are provided.