Bile acids are physiological detergents that facilitate excretion, absorption, and transport of fats and sterols in the intestine and liver. Recent studies reveal that bile acids also are signaling molecules that activate several nuclear receptors and regulate many physiological pathways and processes to maintain bile acid and cholesterol homeostasis. Mutations of the principal regulatory genes in bile acid biosynthetic pathways have recently been identified in human patients with hepatobiliary and cardiovascular diseases. Genetic manipulation of key regulatory genes and bile acid receptor genes in mice have been obtained. These advances have greatly improved our understanding of the molecular mechanisms underlying complex liver physiology but also raise many questions and controversies to be resolved. These developments will lead to early diagnosis and discovery of drugs for treatment of liver and cardiovascular diseases.