In 93 consecutive cases of orthotopic liver transplantation, there were 24 example of biliary obstruction and eight of bile fistula formation. Six of the obstructed livers developed biliary cast formation so extensive that the smaller intrhepatic ducts became plugged to an extent that they could no longer have been treated by surgical mena. In each of the six cases, the most important causative factor was neglected obstruction of the large bile ducts with the intrahepatic lesions apparently being late and secondary. Stone and/or cast formation also occurred in other obstructed livers in the presence of bile fustulas, but these deposits were limited to the large ducts where they could have been or were removed. Although homograft bile undoubtedly has increased lithogenicity at certain posoperative times, the data from the present study have shown that biliary sludge formation essentially is always associated with defective bile duct reconstruction, and the observations have underscored the urgency with which reoperation must be considered. Techniques of secondary intervention have been described, with emphasis on conversion of cholecystojejunostomy to choledochojejunostomy. This operation has permitted salvage of homografts in eight of nine trials and the survival of seven patients.