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This article will concentrate on two main areas of liver allograft pathology where there have been significant advances during the past few years. The first is rejection, which continues to be a common cause of graft dysfunction in the early postoperative period and a rare cause of graft failure. Histological assessment remains essential to confirm the diagnosis of rejection. A recently developed, internationally accepted schema (the Banff schema) for grading acute rejection and staging chronic rejection will be described. With increasing numbers of people surviving long-term following transplantation, the issue of disease recurrence is becoming increasingly important. The second part of the paper deals with the histological diagnosis of disease recurrence and the assessment of other changes seen in biopsies obtained more than 12 months following liver transplantation.