Five children were noted to have arteriohepatic dysplasia (Alagille's syndrome) between 3 and 7 months of age. Prior to diagnosis, four underwent Kasai procedures after intraoperative cholangiograms failed to demonstrate patency of the extrahepatic bile ducts. In three patients, a focal proximal hypoplasia of the common hepatic duct was demonstrated with fibrosis and increased vascularity. Hypoplasia of the gallbladder occurred in two patients. Changes were observed in the porta hepatis. Eighty of 208 micrometers bile ducts were associated with peripherally located gland-like structures. These changes are indistinguishable from those in fibrous remnants of extrahepatic biliary atresia. Hepatic features of sequential liver biopsies obtained in the five patients were divided into early and late changes. From birth to 3 months of age, the pathology consisted of cholestasis and bile duct destruction. After 3 months of age, there was persistent cholestasis, paucity of interlobular bile ducts, and portal fibrosis. Ductular proliferation was not an intrinsic change. When present, it was related to a recent episode of cholangitis.