In this review we develop the argument that cholestatic liver diseases, particularly primary biliary cholangitis and primary sclerosing cholangitis (PSC), evolve over time with anatomically an ascending course of the disease process. The first and early lesions are in "downstream" bile ducts. This eventually leads to cholestasis, and this causes bile salt (BS)-mediated toxic injury of the "upstream" liver parenchyma. BS are toxic in high concentration. These concentrations are present in the canalicular network, bile ducts, and gallbladder. Leakage of bile from this network and ducts could be an important driver of toxicity. The liver has a great capacity to adapt to cholestasis, and this may contribute to a variable symptom-poor interval that is often observed. Current trials with drugs that target BS toxicity are effective in only about 50%-60% of primary biliary cholangitis patients, with no effective therapy in PSC. This motivated us to develop and propose a new view on the pathophysiology of primary biliary cholangitis and PSC in the hope that these new drugs can be used more effectively. These views may lead to better stratification of these diseases and to recommendations on a more "tailored" use of the new therapeutic agents that are currently tested in clinical trials. Apical sodium-dependent BS transporter inhibitors that reduce intestinal BS absorption lower the BS load and are best used in cholestatic patients. The effectiveness of BS synthesis-suppressing drugs, such as farnesoid X receptor agonists, is greatest when optimal adaptation is not yet established. By the time cytochrome P450 7A1 expression is reduced these drugs may be less effective. Anti-inflammatory agents are probably most effective in early disease, while drugs that antagonize BS toxicity, such as ursodeoxycholic acid and nor-ursodeoxycholic acid, may be effective at all disease stages. Endoscopic stenting in PSC should be reserved for situations of intercurrent cholestasis and cholangitis, not for cholestasis in end-stage disease. These are arguments to consider a step-wise pathophysiology for these diseases, with therapy adjusted to disease stage. An obstacle in such an approach is that disease stage-defining biomarkers are still lacking. This review is meant to serve as a call to prioritize the development of biomarkers that help to obtain a better stratification of these diseases. (Hepatology 2017;65:722-738).