Biliary ascites in children due to perforation of bile duct is a rare entity. The exact pathogenesis is not known but there are proposed mechanisms including congenital weakness of ductal wall, pancreaticobiliary malunion, tuberculosis, necrotizing enterocolitis and rupture of choledochal cyst. Presentation may be acute or sub-acute. Progressive insidious course is the common presentation in children with jaundice, clay colored stool, abdominal distension with slightly elevated liver enzymes but well documented cholestasis. Clinical suspicion with ultrasound, CT, MRCP and ascitic tap provides clue to the diagnosis. Both conservative and surgical interventions are in practice for managing these children. We report a 7 months old infant with biliary ascites due to perforation of bile duct.