Liver biopsy is an important part of the evaluation of patients with a variety of liver diseases. Besides establishing the diagnosis, the biopsy is often used to assess the severity of the disease in terms of both grade and stage. The stage in most chronic liver diseases relates to the degree of scarring with the end stage being cirrhosis with its clinical complications. The grade relates to the severity of the underlying disease process, with features that vary with the pathogenetic mechanisms. Chronic viral hepatitis has been the object of the most extensive efforts at grading and staging, stimulated by the advent of new forms of therapy. Systems have also been developed for fatty liver disease, allograft rejection and chronic cholestatic diseases, but these have not been as widely used. Simple grading and staging systems for chronic hepatitis, including the IASL, Batts-Ludwig, and Metavir systems, are most appropriate for management of individual patients, while more complex systems such as the Histology Activity Index (HAI) are appropriate for evaluation of large cohorts of patients when statistical analysis is required.