In 1958 Caroli described a rare disease with multifocal, segmental and saccular dilation of the large intrahepatic bile ducts which causes stagnation of bile and formation of bile sludge and stones. This results in recurrent abdominal pain, cholangitis and hepatic abscesses. The diagnosis is confirmed with endoscopic retrograde cholangiopancreatography (ERCP) and percutaneous transhepatic cholangiography (PTC) and the purpose of treatment is to restore normal bile flow. Partial resection of the liver has given good results in patient with localized disease. The prognosis is poor despite drainage of bile and 46% of patients die from sepsis, hepatic abscesses, hepatic failure or portal hypertension. There is more than a hundred fold risk of cholangiocarcinoma. We report a case where a male who had a history of recurrent bouts of abdominal pain and pancreatitis was diagnosed with Caroli's disease. He later developed cholangiocarcinoma. Caroli's disease has not, to our knowledge, been reported in Iceland before.