The orphan nuclear hormone receptor small heterodimer partner (SHP) regulates the expression of several genes involved in bile acid homeostasis in the liver. Because bile acid toxicity is a major source of liver injury in cholestatic disease, we explored the role of SHP in liver damage induced by common bile duct ligation (BDL). Shp^−/− mice show increased sensitivity in this model of acute obstructive cholestasis, with greater numbers of bile infarcts and higher mortality than wild‐type C57BL/6 mice. This increased sensitivity could not be accounted for by differences in expression of bile acid homeostatic genes 2 or 5 days after BDL. Instead, higher basal expression of such genes, including the key biosynthetic enzyme cholesterol 7α hydroxylase (Cyp7A1) and the bile salt export pump, is associated with both an increase in bile flow prior to BDL and an increase in acute liver damage at only 1.5 hours after BDL in Shp^−/− mice, as shown by bile infarcts. At 3 hours, Cyp7A1 expression still remained elevated in Shp^−/− with respect to wild‐type mice, and the hepatic and serum bile acid levels and total hepatobiliary bile acid pool were significantly increased. The increased sensitivity of mice lacking SHP contrasts with the decreased sensitivity of mice lacking the farnesoid X receptor (FXR; nuclear receptor subfamily 1, group H, member 4) to BDL, which has been associated with decreased intraductal pressure and fewer bile infarcts. Conclusion: We propose that differences in acute responses to BDL, particularly the early formation of bile infarcts, are a primary determinant of the differences in longer term sensitivity of the Fxr^−/− and Shp^−/− mice to acute obstructive cholestasis. (HEPATOLOGY 2008.)