The bile canaliculus contains at least four ATP-binding cassette (ABC) proteins responsible for ATP-dependent transport of bile acids (spgp), nonbile acid organic anions (mrp2), organic cations (mdr1), and phosphatidylcholine (mdr2). Other ABC transporters (including mrp3) have also been partially localized to the canaliculus; however, their function has not been fully delineated. The specific amount and function of spgp and mrp2 in the canalicular membrane increases in response to taurocholate and cAMP. The mechanism involves increased recruitment of spgp and mrp2 from Golgi to the canalicular membrane by a microtubular and PI3 kinase-dependent vesicular trafficking system. Because the effects of taurocholate and cAMP summate, two distinct pathways are proposed. Mdr family members traffic either directly to the apical plasma membrane or, in the case of spgp, through a separate intracellular pool(s); in either case, there is no direct evidence for transcytosis of ABC transporters from Golgi to basolateral plasma membrane and subsequently to the canalicular plasma membrane. Direct transfer from Golgi to apical membrane was demonstrated by in vivo pulse labeling, in vitro membrane localization, and on-line video microscopy in WIFB9 cells that were stably transfected with mdr1-GFP. A critical role for 3'-phosphoinositide products of PI3 kinase was demonstrated in the intracellular trafficking of canalicular ABC transporters and for optimal transporter activity within the canalicular membrane. These studies suggest that many intracellular components, including ATP, Ca2+, numerous GTPases, microtubules, cytoplasmic motors, and other unknown factors, are required for physiologic regulation of ABC transporter traffic from Golgi to the canalicular membrane. Defects in this complex system are postulated to produce an "intrahepatic traffic jam" that results in defective ABC transporter function in the canalicular membrane and, consequently, in cholestasis.