The pathophysiology of circulatory and renal dysfunction in cirrhosis and the treatment of ascites and related conditions (hepatorenal syndrome and spontaneous bacterial peritonitis) have been research topics of major interest during the last two decades. However, many aspects of these problem remain unclear and will constitute major areas of investigation in the next millennium. The pathogenesis of sodium retention, the most prevalent renal function abnormality of cirrhosis, is only partially known. In approximately one third of patients with ascites, sodium retention occurs despite normal activity of the renin-aldosterone and sympathetic nervous systems and increased circulating plasma levels of natriuretic peptides and activity of the so-called natriuretic hormone. These patients present an impairment in circulatory function which, although less intense, is similar to that of patients with increased activity of the renin-aldosterone and sympathetic nervous systems, suggesting that antinatriuretic factors more sensitive to changes in circulatory function that these systems may be important in the pathogenesis of sodium retention in cirrhosis. The development of drugs that inhibit the tubular effect of antidiuretic hormone and increase renal water excretion without affecting urine solute excretion has opened a field of great interest for the management of water retention and dilutional hyponatremia in cirrhosis. Two families of drugs, the V2 vasopressin receptor antagonists and the kappa-opioid agonists, have been shown to improve free water clearance and correct dilutional hyponatremia in human and experimental cirrhosis with ascites. The first type of drugs blocks the tubular effect of antidiuretic hormone and the second inhibits antidiuretic hormone secretion by the neurohypophysis. On the other hand, two new treatments have also been proved to reverse hepatorenal syndrome in cirrhosis. The most interesting one is that based on the simultaneous administration of plasma volume expansion and vasoconstrictors. The second is transjugular intrahepatic porto-systemic shunt. The long-term administration (1-3 weeks) of analogs of vasopressin (ornipressin or terlipressin) or other vasoconstrictors together with plasma volume expansion with albumin is associated with a dramatic improvement in circulatory function and normalization of serum creatinine concentration in patients with severe hepatorenal syndrome. Of interest is the observation that in many of these patients, hepatorenal syndrome does not recur following discontinuation of the treatment, thus raising important questions about the mechanism by which hepatorenal syndrome follows a progressive course in most untreated cases. The pathogenesis of circulatory dysfunction in cirrhosis and the role of local mechanisms in the development of the splanchnic arteriolar vasodilation associated with portal hypertension will continue as important topics in clinical and basic research in Hepatology. Of special interest is the study of the mechanism by which circulatory function further deteriorates following complications such as severe bacterial infection or therapeutic interventions such as therapeutic paracentesis, and the adverse consequences of the impairment in circulatory function on renal and hepatic hemodynamics. Finally, although major advances have been made concerning the treatment and secondary prophylaxis of spontaneous bacterial peritonitis in cirrhosis, many aspects of the pathogenesis of this infection remain unclear. The mechanism of bacterial translocation and of the colonization of bacteria in the ascitic fluid are particularly important to design adequate measures for primary prophylaxis of this severe bacterial infection.