The bile duct epithelium is known to modify hepatic bile by both secretory and absorptive processes. However, identification and characterization of the transport systems that carry out these physiological functions at the cellular and molecular level have been slow compared with progress in understanding hepatic bile production. Recently, techniques have been developed that enable bile duct cells to be isolated in substantial number and purity and as intact polarized units that can be studied in vitro. These newer preparations have enabled classic physiological approaches to be performed directly with the bile duct epithelial tissues. Progress in this important area of biliary physiology is now rapid and forms the basis for this review.