Neonatal cholestasis occurs in approximately 1 in 2500 term infants, the most common underlying disease being biliary atresia, viral infections and α₁-antitrypsin deficiency. The incidence of cholestasis is much higher in extremely premature newborns. The etiology of biliary atresia remains unclear, which in turn makes the search for additional treatments to surgery challenging. Reliable non-invasive tools to differentiate biliary atresia from other forms of neonatal cholestasis need to be further investigated. Despite important findings in the last decades, the pathogenesis of cholestatic liver disease in α₁-antitrypsin deficiency remains to be clarified. Any such explanation would also need to explain why only a minority of individuals with PiZZ phenotype develop liver disease. For other genetic diseases causing neonatal cholestasis, such as Alagille's syndrome and progressive familial intrahepatic cholestasis the breakthrough within the field of molecular biology has definitely deepened our understanding of both etiology and pathogenesis. However, the correlation between genotype and phenotype is rarely obvious and for several patients with the seemingly correct phenotype no known genetic mutation is detected. A stepwise approach to the management of cholestasis in the newborn and infant is suggested, where percutaneous liver biopsy is of value to select patients with suspected biliary atresia for laparotomy.