Together, neonatal hepatitis and biliary atresia make up approximately 70 to 80% of the causes of neonatal cholestasis. Biliary atresia must be differentiated from neonatal hepatitis as soon as possible in order to institute early surgical intervention. We performed this study to examine whether the measurement of the serum alpha-fetoprotein (AFP) and thyroxine-binding globulin(TBG) was useful for differentiating these two conditions. Serum AFP levels were measured using enzyme immunoassay in 76 infants with cholestasis and serum TBG levels were measured using radio immunoassay in 30 infants with cholestasis and 23 infants without cholestasis. Serum AFP and TBG concentrations in patients were compared with the normal ranges in infants and were expressed as standard deviation (SD) scores. 52.7% of the patients with neonatal hepatitis showed SD scores of AFP higher than 4.0. By contrast, 14.3% of the patients with biliary atresia showed SD scores of AFP highter than 4.0(p<0.005). The patients with either neonatal hepatitis or biliary atresia had TBG concentrations above the normal ranges, but there was no difference between neonatal hepatitis and biliary atresia. The patients with neonatal hepatitis who recovered from jaundice after 6 months of age or progressed to chronic liver disease of died of the liver disease showed hight serum levels of AFP and TBG than the patients who recovered from jaundice before 6 months of age. In conclusion. SD scores of AFP could be used to differentiate between neonatal heptatis and biliary atresia, and SD scores of AFP and TBG might be used as an indicator of prognosis of neonatal hepatitis.