Parenteral nutrition is life saving in patients with intestinal failure but liver dysfunction is commonly encountered, especially in neonates. Although abnormal liver function tests associated with short-term parenteral nutrition are usually benign and transient, liver dysfunction in both children and adults receiving long-term parenteral nutrition can progress to end-stage liver disease and liver failure. The aetiology of parenteral nutrition-associated liver disease is complex and multifactorial, with a range of patient, disease and nutrition-related factors implicated. Sepsis is of particular importance, as is the lack of enteral nutrition and overfeeding with intravenous glucose and/or lipid. Deficiencies of a number of amino acids including choline and taurine have also been implicated. Management of hepatic dysfunction in parenteral nutrition should initially focus on preventing its occurrence. Sepsis should be managed appropriately, enteral nutrition should be encouraged and maximised where possible and parenteral overfeeding should be avoided. Provision of parenteral lipid should be optimised to prevent the adverse effects of both deficiency and excess, and cyclical rather than continuous parenteral feeding should be administered. There is some evidence of benefit in neonates from oral antibiotics to prevent intestinal bacterial overgrowth and from oral ursodeoxycholic acid, but less to support their use in adults. Similarly, data to support widespread use of parenteral choline or taurine supplementation are lacking at present. Ultimately, severe parenteral nutrition-associated liver disease may necessitate referral for small intestine and/or liver transplantation.