Primary sclerosing cholangitis (PSC) is a progressive fibrosing cholestatic liver disease that is strongly associated with inflammatory bowel disease (IBD). PSC-associated IBD (PSC-IBD) displays a unique phenotype characterized by right-side predominant colon inflammation and increased risk of colorectal cancer compared to non-PSC-IBD. The frequent association and unique phenotype of PSC-IBD suggest distinctive underlying disease mechanisms from other chronic liver diseases or IBD alone. Multidrug resistance protein 2 knockout (Mdr2-/-) mice develop spontaneous cholestatic liver injury and fibrosis mirroring human PSC. As a novel model of PSC-IBD, we treated Mdr2-/- mice with dextran sulfate sodium (DSS) to chemically induce colitis (Mdr2-/-/DSS). Mdr2-/- mice demonstrate alterations in fecal bile acid composition and enhanced colitis susceptibility with increased colonic adhesion molecule expression, particularly mucosal addressin-cell adhesion molecule 1 (MAdCAM-1). In vitro, ursodeoxycholic acid (UDCA) co-treatment resulted in a dose dependent attenuation of TNF-α-induced endothelial MAdCAM-1 expression. In the combined Mdr2-/-/DSS model, UDCA supplementation attenuated colitis severity and downregulated intestinal MAdCAM-1 expression. These findings suggest a potential mechanistic role for alterations in bile acid signaling in modulating MAdCAM-1 expression and colitis susceptibility in cholestasis-associated colitis. Together, our findings provide a novel model and new insight into the pathogenesis and potential treatment of PSC-IBD.