Slides of 97 liver biopsies performed in 87 infants with obstructive jaundice due to neonatal hepatitis and extrahepatic biliary duct atresia were reviewed in order to evaluate the histopathologic criteria for establishment of the diagnosis. Biopsies were interpreted in the absence of clinical information and were designated as representing either hepatitis or biliary atresia. Adequate followup data were available in 64 cases to establish the validity of the diagnosis. Twenty-three of 23 patients diagnosed as having hepatitis either recovered or had demonstration of the patency of the extrahepatic bile ducts. Thirty-nine of 41 patients designated as having atresia were shown to have an obstructive lesion. Of these, 36 were, on the basis of the clinical course, surgical findings, and cholangiographic data, considered to be examples of extrahepatic bile duct atresia. Three patients had liver biopsy changes identical to those of atresia: two choledochal cysts and one obstructive plug of bile in the common bile duct. Two other patients subsequently became anicteric. Diagnostic error, which was based on histopathologic interpretation of both needle and open liver biopsies, was 3.5%. While 80% of the biopsies were obtained at laparotomy, the application of the cited histopathologic criteria should result in a similarly high degree of accuracy in interpretation of percutaneous needle biopsies.