Liver function and histological changes in liver biopsies were studied in 37 patients who had been treated for psoriasis with methotrexate. Cirrhosis was found in seven (19%) and hepatic fibrosis of varying severity in 10 (27%). Minor abnormalities in another 17 (46%) consisted of fatty change, round cell infiltration, and extensive vacuolation of liver cell nuclei. In only three (8%) was hepatic histology entirely normal. The severity of liver damage was related to the duration of methotrexate treatment. Minor abnormalities of liver function tests and liver histology were also found in eight control psoriatic patients. Standard liver function tests were of little value in predicting the degree of liver damage. It appears that methotrexate, in the doses normally used to control psoriasis, may cause cirrhosis if treatment is prolonged and that liver biopsy is necessary for evaluation of liver damage in these patients.