Objectives: To determine what changes are occurring in patients with primary sclerosing cholangitis (PSC) by examining perisinusoidal macrophages (Kupffer cells) in liver biopsies; 2-to measure transforming growth factor beta (TGFβ) as a marker of fibrosis in these patients. Design and methods: Transmission electron microscopy and immunohistochemistry of 15 PSC, 26 primary biliary cirrhosis (PBC), 30 alcoholic liver disease (ALD) and 51 with normal histology was used. Five PSC, 30 ALD and 120 normal volunteers were sampled for serum levels of TGFβ. Results: There was a three-fold increase in relative numbers of Kupffer cells in PSC compared to PBC and to patients whose livers had normal histology. In PSC there was an accumulation of perisinusoidal macrophages, which was not associated with focal necrosis or with cholestasis. The levels of TGFβ in PSC were 54 ± 2 in cirrhotic versus 34 ± 5 in non-cirrhotic patients ( p < 0.005). Conclusion: The persistent activation of these macrophages may lead to the chronic release of TGFβ and contribute to chronic inflammation, fibrosis and cirrhosis.