Cholestasis results in the intrahepatic retention of cytotoxic bile acid and it can thus lead to liver injury and/or liver fibrosis. Cholestatic liver damage is counteracted by a variety of intrinsic hepatoprotective mechanisms including a complex network of drug metabolizing enzymes and transporters. During the last decade, much progress has been made in dissecting the mechanisms which regulate the hepatic xeno- and endobiotic metabolism by nuclear receptors. The xenobiotic receptors CAR and PXR are two important members of the NR1I nuclear receptor family. They function as sensors of toxic byproducts derived from the endogenous metabolism and of exogenous chemicals, in order to enhance their elimination. Ligands for both receptors, including phenobarbital, have already been used to treat cholestatic liver diseases before the mechanisms of these receptors were revealed. Furthermore, Yin Zhi Huang, a traditional Chinese herbal medicine, which has been used to prevent and treat neonatal jaundice, was identified to be a CAR ligand which also accelerates bilirubin clearance. Therefore, CAR and PXR have a protective effect on cholestasis by activating both detoxification enzymes and transporters. As a result, novel compounds targeting CAR and PXR with specific effects and fewer side effects will therefore be useful for the treatment of cholestatic liver diseases. This article will review the current knowledge on xenobiotic-sensing nuclear receptors CAR and PXR, while also discussing their potential role in the treatment of cholestatic liver diseases.