Pseudoaneurysm of the cystic artery is a rare cause of hemobilia, with only 11 cases having been reported in the English literature. We report this unusual condition in a 62-year-old Japanese man whose chief complaint was repeated upper abdominal pain. A liver function test showed obstructive jaundice, and endoscopy revealed a small amount of blood coming from the papilla of Vater. We diagnosed him as having hemobilia, and immediate angiography was performed. The results demonstrated a pseudoaneurysm arising in the cystic artery. Selective embolization of the cystic artery then followed. Ten days later the patient underwent elective cholecystectomy and had a good postoperative course. Microscopically, the resected specimen revealed caliculous cholecystitis and an organized pseudoaneurysm perforating the lumen of the gallbladder. We supposed that this pseudoaneurysm was associated with the inflammatory reaction seen with the acute cholecystitis. This case emphasizes the need for a high level of awareness of hemobilia whenever bleeding is associated with signs of biliary disorders. Immediate angiography and embolization of the pseudoaneurysm followed by radical surgery may be the preferred strategy. We believe this is the first reported case of successful "two-step" treatment of such a pseudoaneurysm.