Congenital choledochal cysts carry a risk of cancer, probably as a result of a sequence of pancreatobiliary reflux, inflammation, dysplasia with or without intestinal metaplasia, and invasive carcinoma. A combination of biliary stasis due to poor drainage of a stagnant pool of bile and increased mutagenicity of the bile acids may be ultimately responsible. There is very frequently an anomalous pancreato-biliary ductal junction, and the reflux of pancreatic juice into the bile duct is thought to play a central role in the process of carcinogenesis. The risk of cancer is low in childhood (under 1% in the first decade), but shows a clear increase with age (over 10% in the third decade). The implication for management is that total excision of the extrahepatic biliary tree at risk remains the gold standard for management of these cysts, and simple bypass in infancy or childhood leaves the risk of cancer, though possibly diminished, still significant.