Renal dysfunction in cirrhosis describes a spectrum of abnormalities which lead to the clinical manifestations of ascites, peripheral oedema and hepato-renal failure. This article reviews the processes underlying this dysfunction with particular regard to the disturbance in the renal circulation. Renal haemodynamic changes occur early in cirrhosis prior to the development of ascites. However, as the liver disease progresses these changes become more profound and lead ultimately to severe cortical hypoperfusion. Renal blood flow and glomerular filtration rate do not appear to correlate well with the presence of ascites, and a separate defect in tubular sodium handling is likely to be present. The development of portal hypertension is a possible trigger of increased renal vascular resistance, whereas a deterioration in liver function may relate to the impaired tubular handling of sodium. The peripheral vasodilatation hypothesis seeks to relate these renal changes to the activation of vasopressor systems after the development of arteriolar vasodilatation. Correlations between systemic vascular resistance and renal blood flow have been difficult to establish. A variety of substances may mediate the renal circulatory changes. The likelihood is that the increase in systemic vasoconstrictors is compensatory, and that it is the locally active vasoactive substances, particularly those derived from the endothelium, which play a major role in the development of renal vasoconstriction. The management of ascites is fraught with complications, and the treatment of hepato-renal syndrome inadequate. Liver transplantation is currently the only therapy which gives any hope of long-term response and survival. Methods of improving the renal circulation by mechanically lowering portal pressure or by antagonizing locally active renal vasoconstrictors may be beneficial.