Cholesterol gallstones are one of the most prevalent and most costly digestive diseases in the developed countries. Although precipitation of cholesterol from supersaturated bile is the first irreversible physical-chemical step in cholesterol gallstone formation, hepatic hypersecretion of biliary cholesterol is the primary defect in the formation of cholesterol gallstones. The other common abnormalities of the hepatobiliary system in gallstone patients include accelerated cholesterol nucleation/crystallization, gallbladder hypomotility, hypersecretion and accumulation of mucins, high efficiency of intestinal cholesterol absorption and slow intestinal motility. Family and twin studies in humans as well as gallstone prevalence investigations in different strains of inbred mice have clearly demonstrated that a complex genetic basis could determine individual predisposition to develop cholesterol gallstones in response to environmental factors such as high dietary cholesterol. In this review, we summarize progress in understanding the molecular pathophysiology of cholesterol gallstone formation with particular reference to most recent advances in the physical-chemistry of bile and the physiology of biliary lipid secretion.