Ascites is a significant complication of cirrhosis that occurs in approximately 50% of patients. The mortality rate is high in patients with cirrhosis and ascites. Conventional interventions rest with dietary sodium restriction, diuretic use, large-volume paracentesis, peritoneovenous shunts and transjugular intrahepatic portosystemic shunts. The mainstay of therapy, however, is the judicious use of diuretics. This article reviews the physiological basis of diuretic use in patients with cirrhosis and ascites, as well as recent concepts on the pathogenesis of ascites formation. Through a better understanding of the pathophysiology of ascites formation and the mechanism of action of diuretics, improved extracellular fluid balance can be achieved in these patients.