Methotrexate (MTX) has become an important drug in the treatment of rheumatoid arthritis (RA). The American College of Rheumatology convened a committee to assess the risks of development of clinically significant liver disease (CSLD) during MTX treatment, to evaluate the risk and role of surveillance liver biopsies, and to provide recommendations about monitoring patients for liver toxicity. The committee recommends obtaining liver blood tests (alanine aminotransferase [ALT], aspartate aminotransferase [AST], alkaline phosphatase, albumin, bilirubin), hepatitis B and C serologic studies, and other standard tests including complete blood cell count and serum creatinine tests prior to starting treatment with MTX. A pretreatment liver biopsy should be considered only for patients with a history of prior excessive alcohol consumption, persistently abnormal baseline AST values, or chronic hepatitis B or C infection. At intervals of every 4–8 weeks the AST, ALT, and albumin levels should be monitored. Routine surveillance liver biopsies are not recommended for RA patients receiving traditional doses of MTX. However, a biopsy should be performed if a patient develops persistent abnormalities on liver blood tests. These are defined as elevations (above the upper limit of laboratory normal) in the AST in 5 of 9 determinations within a given 12-month interval (6 of 12 if tests are performed monthly) or a decrease in serum albumin below the normal range. The recommendations for monitoring and selection of patients for liver biopsy identify patients at potential risk for CSLD, and thus significantly reduce the number of patients who would be exposed to this procedure. Close monitoring is essential to reduce the risk of unrecognized serious liver disease. These recommendations should be revised as necessary to reflect new and compelling information.