Neonatal cholestasis is prolonged elevation of conjugated serum bilirubin (more than 20% of total bilirubin) beyond first 14 days of life. After extensive evaluation a diagnosis of either biliary atresia or neonatal hepatitis is made in 70-80% of cases. Neonatal hepatitis and biliary atresia form a pathophysiologic process directed at various levels of the hepatobiliary tract. Inflammation in the bile duct epithelium may result in the sclerosis and obliteration of the bile ducts and manifest as biliary atresia. Primary hepatocellular inflammation is more likely to result in neonatal hepatitis. Half of the cases of neonatal hepatitis resolve without sequelae, while most of the biliary atresia cases require surgical intervention for repair or, ultimately, liver transplant.