Known risk factors for the development of dysplasia and cancer in ulcerative colitis (UC) patients are: 1) increased extent and duration of disease and 2) increased age at symptom onset. This case-control study was performed to determine whether cholestatic liver disease is associated with neoplastic transformation. Twenty-nine UC patients with extensive disease of long duration and dysplasia or cancer detected in a cancer surveillance program were pair-matched to UC patients without neoplasia from a large inflammatory bowel disease registry matched on extent of disease, sex, and calendar year of disease onset. Of the 29 cases, 10 were found to have cholestatic liver disease; nine with pericholangitis and one with primary sclerosing cholangitis (PSC). Two controls had PSC. Cholestatic liver disease was a significant risk factor for the development of dysplasia or cancer (odds ratio 9.00, 95% confidence interval 1.14-71.0). Increased age at symptom onset also was found to be a significant risk factor for neoplasia (odds ratio 1.04 for each additional year, 95% confidence interval 1.00-1.08) that did not exhibit confounding or interacting effects with cholestatic liver disease. The degree of neoplasia (low-grade dysplasia, high-grade dysplasia, or cancer) did not appeared to affect the results. Therefore, cholestatic liver disease, either pericholangitis or PSC, was significantly associated with the development of dysplasia or cancer in UC patients and should be considered an important risk factor for neoplastic transformation.