The vesicular transport system for biliary secretion of plasma-derived proteins was investigated in rats with chronic bile duct obstruction. Horseradish peroxidase, previously demonstrated to be a suitable tracer for vesicular transport, was employed in these studies. Both the time course of horseradish peroxidase secretion into bile and the morphological events in its uptake, transport, and biliary secretion were found to proceed in a manner essentially identical to that of sham-operated control animals. In addition, fragmentation of hepatocytes leading to sloughing into bile of large pieces of cytoplasm bearing horseradish peroxidase-containing endocytic transport vesicles frequently was observed in the cholestatic animals. These data suggest that the vesicular transport system for the secretion into bile of plasma-derived proteins remains intact and functional during chronic bile duct obstruction and that another mechanism, possibly fragmentation and solubilization of hepatocyte membranes followed by regurgitation of proteins released from endocytic vesicles, may be responsible for the elevation of biliary proteins within plasma seen during cholestasis.