Congenital biliary atresia is an incurable disease of newborn infants that is characterised by deformation of the gallbladder and biliary duct system. Yoshiakira Kanai and co-workers now report (p. 639) that haploinsufficiency of Sox17 in C57BL/6 background mice provides a genetic model for this poorly understood condition. The researchers show that SOX17, a transcription factor that is required for definitive endoderm development in various vertebrate species, is expressed at the distal edge of the gallbladder primordium during gallbladder and bile duct development. In Sox17+/− C57BL/6 embryos, cell-autonomous defects in the proliferation and maintenance of the gallbladder/bile duct epithelia lead to epithelial cell detachment from the luminal wall, bile duct atresia (blockage), bile leakage and inflammation in the bile ducts and liver at late foetal stages. These results suggest that SOX17 has a dose-dependent function in the morphogenesis and maturation of gallbladder and bile duct epithelia during late organogenesis and provide new insights into the pathogenesis of congenital biliary atresia.