Hepatic fibrosis, a consequence of most forms of chronic liver disease, is a dynamic process involving complex interactions between several cell types, the net result of which is accumulation of several distinct extracellular matrix (ECM) proteins. The resultant disruption of intrahepatic blood flow contributes to the development of portal hypertension. The effects, however, are not merely a space-occupying phenomenon; by changing the composition of the ECM, fibrosis may also alter hepatocyte function via cellular integrins. The principal source of ECM proteins in normal and fibrotic liver is the perisinusoidal cells which lie in the space of Disse. The response of this cell population to acute and chronic liver injury has been studied in detail. Perisinusoidal cells proliferate and become activated following hepatocyte necrosis. This phenomenon is transient in acute injuries, but in chronic liver disease, continued activation is associated with phenotypic modulation of perisinusoidal cells to myofibroblasts. This process is mediated by various cytokines including TGF-beta and PDGF. Some of the growth factors involved are derived from activated Kupffer cells and there is evidence of a complex interplay between mediators; injured sinusoidal endothelial cells and platelets are possible additional sources. Accumulation of ECM proteins in fibrosis can be explained not only by increased synthesis, but also by decreased degradation. There is growing evidence that in fibrotic liver there is decreased interstitial collagenase activity. This is, at least in part, due to expression of a tissue inhibitor of metalloproteinase, TIMP-1, by activated perisinusoidal cells.