The histopathological features of orthotopic liver grafts were studied in 107 serial specimens from 25 patients, to assess the prevalence, possible pathogenesis and prognostic implications of hepatocellular ballooning. Ballooned hepatocytes were found in 46 (54%) of 85 biopsies taken five or more days after transplantation from 16 patients. They were not found in any of the protocol biopsies taken at the time of the operation. Ballooning usually appeared in the second week after transplantation, and in most patients persisted to the time of the latest biopsy studied. The affected cells were always found in acinar zone 3, and sometimes also in other zones. Forty-four of the 46 biopsies with ballooning were taken during a period of clinical and biochemical cholestasis. In 13 of the 16 patients the degree of ballooning paralleled the severity of the cholestasis. Electronmicroscopy of affected hepatocytes showed conspicuous dilatation of the cisternae of the rough endoplasmic reticulum rather than the classical features of cholestasis. It was therefore concluded that ballooning was associated with but not directly caused by bile retention. There was no obvious association between ballooning and cellular rejection, sepsis, immunosuppressive therapy or parenteral nutrition. The most severe early ballooning was associated with serum transaminase levels over 1000 IU/l within 48 h of transplantation, suggesting that ischaemia was one of the pathogenetic factors. Hepatocellular ballooning did not in itself appear to have sinister short-term prognostic implications.