The effect phalloidin on bile acid, phospholipid and cholesterol secretion into bile was studied in rats with bile fistulae. 2. Phalloidin, when given for 7 days, induced a significant decrease in biliary cholesterol concentration and cholesterol saturation index. Bile acid and phospholipid concentration in bile remained unchanged. This effect was less marked in animals receiving the drug for 3 days, and not detectable in animals treated for 1 day. 3. These results provide circumstantial evidence for the hypothesis that microfilament dysfunction may lead to alterations in cholesterol secretion into bile.