Bile acids are the major determinant and driving force for the generation of bile flow. Bile acid transport across the canalicular membrane is primarily an ATP-dependent process. The predominant transporter is the bile salt excretory pump (BSEP, ABCB11), a member of the adenosine triphosphate-binding cassette (ABC) family of transporters. Regulatory mechanisms that can coordinate the genes encoding bile acid transport proteins are critically important to avoid hepatocyte damage from intracellar accumulation of bile acids. Bile salts are natural ligands for several nuclear hormone receptors expressed in liver and intestine. Nuclear receptors are transcription factors that bind specific ligands such as bile acids and regulate gene expression according to the metabolic requirements of the cell. In cloning of the BSEP gene, we found a binding site in the promoter for the farnesoid X receptor (FXR), a nuclear receptor for bile acids. FXR activity requires heterodimerization with the 9-cis retinoid receptor (RXR alpha), and when bound by bile acids and retinoic acid, the complex effectively activates the transcription of BSEP. There is a growing body of evidence for the activation of nuclear hormone receptors through the remodeling of chromatin by histone modification involving acetylation, in concert with methylation of H3 and H4 histones. We have recently demonstrated a role for the coactivator-associated arginine methyltransferase 1 (CARM1), as a coactivator of the FXR/RXR receptor and regulator of FXR responsive genes such as BSEP. Chromatin immunoprecipitation showed that the bile acid-dependent activation of the human BSEP is associated with a simultaneous increase of FXR and CARM1 occupation of the BSEP promoter. The increased occupation of the BSEP locus by CARM1 also corresponds with the increased deposition of Arg-17 methylation and Lys-9 acetylation of histone H3 within the FXR DNA-binding element of BSEP. Our work on the role of nuclear receptors in regulation of bile acid homeostasis has led to an increased understanding of the pathogenesis of the disorder, progressive familial intrahepatic cholestasis, type 1 (PFIC1) or Byler disease. The gene mutated in PFIC1 is called FIC1 and codes for a type IV P-type ATPase whose function is unknown. Increased ileal apical sodium-dependent bile acid transporter messenger RNA (mRNA) expression was detected in 3 patients with PFIC1. Ileal FXR and short heterodimer partner (an inhibitory nuclear receptor) messenger RNA levels were reduced in the same 3 patients. In studies of cells after antisense-mediated knock-down of endogenous FIC1, the activity of the ileal apical bile acid transporter promoter was enhanced, whereas the activities of the human FXR and BSEP promoters were reduced. Nuclear but not cytoplasmic localization of FXR is markedly decreased in FIC1-negative cells, indicating that FIC1 is necessary for posttranslational modifications necessary for the nuclear translocation of FXR. This defect leads to enhanced ileal bile salt uptake and impaired canalicular bile salt secretion by BSEP. In PFIC1, an increased load of bile acids is retained in the liver leading to cholestasis and progressive liver injury.