Biliary atresia is a fibro‐inflammatory cholangiopathy that obstructs the extrahepatic bile ducts in young infants. Although the pathogenesis of the disease is undefined, studies in livers from affected children and neonatal mice with experimental biliary atresia have shown increased expression of proapoptosis molecules. Therefore, we hypothesized that apoptosis is a significant mechanism of injury to duct epithelium. To test this hypothesis, we quantified apoptosis using terminal transferase dUTP nick end labeling and active caspase‐3 staining in livers and extrahepatic bile ducts from Balb/c mice infected with Rhesus rotavirus (RRV) within 24 hours of birth. RRV induced a significant increase in labeled cells in the portal tracts and in epithelial and subepithelial compartments of extrahepatic bile ducts, with onset within 3 days and peaks at 5–10 days. Exploring mechanisms of injury, we found increased biliary expression of caspases 1 and 4 and of interferon‐gamma (IFNγ)–related and tumor necrosis factor‐alpha (TNFα)–related genes. Using a cholangiocyte cell line, we found that neither IFNγ nor TNFα alone affected cell viability; however, simultaneous exposure to IFNγ and TNFα activated caspase‐3 and decreased cell viability. Inhibition of caspase activity blocked apoptosis and restored viability to cultured cholangiocytes. In vivo, administration of the caspase inhibitor IDN‐8050 decreased apoptosis in the duct epithelium and the extent of epithelial injury after RRV challenge. Conclusion: The biliary epithelium undergoes early activation of apoptosis in a mouse model of biliary atresia. The synergistic role of IFNγ and TNFα in activating caspase‐3 in cholangiocytes and the decreased apoptosis following pharmacologic inhibition of caspases support a prominent role for apoptosis in the pathogenesis of experimental biliary atresia. (HEPATOLOGY 2008.)