Three children with surgically corrected extrahepatic biliary atresia developed recurrent cholangitis associated with bile lakes that failed to drain via the hepatoportoenterostomy. Surgical or percutaneous drainage of these cysts was followed by both resolution of the infection and spontaneous internal drainage. We postulate that the ongoing inflammatory process resulted in intrahepatic biliary obstruction, which caused cholangitis and bile cysts. Successful treatment required not only antibiotics but drainage of the bile lakes. Development of bile cysts is a new cause of recurrent cholangitis seen in extrahepatic biliary atresia.