Administration of parenteral nutrition to the small infant has decreased morbidity but is associated with the development of cholestasis and liver dysfunction in a high proportion of infants. In this review, contributing factors of the etiopatho genesis of parenteral nutrition-associated liver disease will be outlined, forming the basis for a unifying theory of its pathogenesis. it is proposed that oxidant stress and stimulation of hepatic Kupffer cells by bacterial cell wall products absorbed from the injured intestine are major factors leading to cholestasis and liver injury during prolonged parenteral nutrition. Improved outcome in patients has been related to the early introduction of feedings. New proposed therapeutic modalities have included antibiotics and probiotics to prevent bacterial overgrowth of the small intestine, enterally-administered ursodeoxycholic acid and intravenous cholecystokinin. Improved understanding of the fundamental mechanisms producing liver injury and fibrosis during parenteral nutrition will lead to new preventative and treatment measures in the future.