Abstract Orally given ursodeoxycholic acid (UDCA) has beneficial effects on laboratory parameters in different cholestatic conditions. In order to investigate the effect on early graft function after liver transplantation, 33 patients were randomized to receive either UDCA 15 mg/kg per day or placebo from the 1st postoperative day until 3 months after transplantation. All liver grafts produced bile within 24 h after revascularization. In both groups there was an increasing bile flow each day until day 5 after transplantation. This increase was more pronounced in the UDCA group where the flow on day 2 reached a mean value of 183 ± 28 ml/day compared to 106 ± 17 ml/day in the placebo group (P < 0.05). The average daily volume of bile produced during the first 10 days was also found to be higher in the UDCA group compared to the placebo group (242 ± 20 ml vs 176 ± 18 ml, P < 0.02). In the UDCA group a significant decrease in total bile acid output between the 5th and 10th postoperative days was found, while in the placebo group the amount of bile acids excreted remained stable over time. The composition of bile differed between the two groups with an increase in the portion of UDCA in the UDCA group from the 2nd postoperative day (25 % vs 4.6 %, P < 0.0003). The fraction of UDCA then remained high during the whole study period with a peak at day 3 when 38.1 ± 6.6% of the bile acids consisted of UDCA. In the placebo group, the fraction of UDCA was low from the beginning and diminished further over time. Prophylactic UDCA treatment was found to have a significant positive impact on the ALT level during the 4th and 5th postoperative days, but had no effect on bilirubin or GGT in the early postoperative phase (days 1–10). No differences in cyclosporin requirement were found between the two groups.