Ursodeoxycholic acid (UDCA) is a hydrophilic biliary acid that has been used in the medical therapy of cholelithiasis. In the last decade, its use in the treatment of some liver diseases renewed the interest on its hepato-protective properties. Controlled trials have demonstrated that UDCA has symptomatic and laboratory beneficial effects in primary biliary cirrhosis and sclerosing cholangitis. However its effects on the long-term and patients survival have not been determined. Uncontrolled trials on the effects of UDCA on a series of cholestatic liver diseases (cystic fibrosis, chronic hepatitis, cholestasis of pregnancy, etc) have communicated promising results that require confirmation with methodologically rigorous studies. The research in this area has significantly stimulated the study of the mechanisms of cellular injury associated to cholestatic phenomena and its prevention or attenuation with UDCA. The present review analyzes the most outstanding aspects of UDCA mechanisms of action, pharmacology and clinical efficacy in the treatment of liver diseases.