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Biliary function is essential for intestinal absorption of fat, homeostasis of cholesterol and elimination of diverse metabolic end-products. Bile is elaborated in hepatocyte canaliculi and modified by cholangiocytes through both secretion and absorption processes. The main determinant of bile formation is an osmotic filtration process resulting from active transport of bile acids and other osmotic solutes. Most of the membrane transporters ensuring bile formation have now been identified. The expression of these membrane transporters is regulated in particular through transcriptional mechanisms under the control of nuclear receptors activated by ligands, such as bile acids, which act as endogenous steroids synthesized from cholesterol in hepatocytes. Monogenic cholestatic diseases illustrate the key role of membrane transporters in biliary function. Bile acids are potent modulators of transporters and thus trigger an adaptative response to cholestasis. The extent of this adaptative response could explain the compelling phenotypic variability of cholestatic diseases in childhood and adults. The firstline medical treatment is currently ursodeoxycholic acid. In case of failure of this medical treatment, liver transplantation is required. Recent progress in the molecular pathogenesis of bile formation and cholestatic liver diseases is expected to provide the design for drugs targeted to the molecular abnormalities responsible of cholestatic diseases.