Biliary atresia is an obliterative disorder of the bile ducts, causing obstructive jaundice in neonates. In this study, the developing biliary system of normal human embryos and fetuses was examined and compared with the resected extrahepatic biliary remnants from 205 cases of biliary atresia. At the porta hepatis level, it was found that the primary biliary ductal plate undergoes a specific sequence of remodelling, resulting in the formation of large tubular bile ducts surrounded by thick mesenchyme, between 11 and 13 weeks postfertilisation. These developing ducts are in luminal continuity with the extrahepatic biliary tree throughout gestation. Contrary to long-held belief, no "solid phase" was observed in the development of the extrahepatic bile duct. Examination of the biliary remnants in biliary atresia showed that the porta hepatis is encased in fibrous tissue, and a variable pattern of obliteration of the common hepatic and common bile ducts was observed. Anticytokeratin immunostaining showed similarities between the abnormal ductules within the porta hepatis in biliary atresia, and the developing bile ducts in the first trimester. Biliary atresia may be caused by failure of the remodelling process at the hepatic hilum, with persistence of fetal bile ducts poorly supported by mesenchyme. As bile flow increases perinatally, bile leakage from these abnormal ducts may trigger an intense inflammatory reaction, with subsequent obliteration of the biliary tree.