Primary sclerosing cholangitis is an increasingly recognized chronic cholestatic liver disease. It frequently occurs in association with chronic ulcerative colitis and is characterized by inflammation and fibrosis of the intrahepatic and extrahepatic bile ducts. The cause is unknown, although many mechanisms have been considered, including infectious, toxic, and immunologic. The prognosis varies. No adequate treatment exists, although a number of potential treatments have been evaluated in uncontrolled trials, and the results of controlled trials have only recently been reported. Liver transplantation has recently been shown to be an effective treatment for end-stage disease. These various advances in our understanding of primary sclerosing cholangitis are reviewed.