Alpha-1-antitrypsin (alpha 1-AT) deficiency is a well known cause of emphysema in adults. A subgroup of deficient individuals develops liver injury during infancy and childhood. In fact, it is the most common genetic cause of liver disease in children. Although lung injury is due to the decrease in alpha 1-AT function in the lung, allowing uninhibited elastolytic destruction of its connective tissue integrity, liver injury is probably due to retention of the mutant alpha 1-AT molecule in the endoplasmic reticulum (ER) of liver cells. Recent studies have shown that the mutant alpha 1-AT molecule polymerizes in the ER by a novel loop-sheet insertion mechanism. Other recent studies show that the subgroup of deficient individuals is susceptible to liver injury by virtue of unlinked genetic traits and/or environmental factors which interfere with degradation of the mutant alpha 1-AT molecules within the ER.