The regenerative capacity of the liver is an important factor following liver surgery. The dramatic change in portal venous flow, due to either portal vein embolization or partial hepatectomy, induces a rapid change in liver volume. In response to these stresses, hepatocytes are primed, through the release of inflammatory cytokines, to increase the expression of immediate early genes and increase the activation of transcriptional factors. The primed hepatocytes then respond to growth factors, including hepatocyte growth factor, epidermal growth factor, and transforming growth factor-alpha. Several pathologic conditions have been shown to inhibit hepatic regeneration. These include diabetes mellitus, malnutrition, aging, infection, chronic ethanol consumption, and biliary obstruction. Impaired hepatic regeneration in the setting of biliary obstruction is an especially serious problem because it can be a major determinant in not considering surgical treatment. The mechanism responsible for impaired hepatic regeneration in patients with biliary obstruction includes decreased portal venous flow, attenuated production of liver proliferation-associated factors, an increased rate of apoptosis, and lack of enterohepatic circulation. Restoring these factors may lead to an improvement in regeneration in a cholestatic liver following portal vein embolization or partial hepatectomy. This review article summarizes the current understanding of the mechanism of hepatic regeneration, with particular emphasis on that in the cholestatic liver.