Gestational alloimmune liver disease (GALD) produces severe neonatal liver disease that is notable for paucity of hepatocytes, large numbers of parenchymal tubules, and extensive fibrosis. Liver specimens from 19 GALD cases were studied in comparison with 14 infants without liver disease (normal newborn liver; NNL) to better understand the pathophysiology that would produce this characteristic histopathology. GALD liver parenchyma contained large numbers of tubules comprising epithelium expressing KRT7/19, EPCAM, and SOX9, suggesting biliary progenitor status. Quantitative morphometry demonstrated that in GALD, the area density of KRT19+ tubules was 16.4 +/- 6.2 versus 2.0 +/- 2.6 area% in NNL (P < .0001). Functional hepatocyte mass was markedly reduced in GALD, 16.3 +/- 6.2 versus 61.9 +/- 11.0 area% of CPS1+ cells in NNL (P < .0001). A strong inverse correlation was established between CPS1+ area density and KRT19+ area density (r(2) = 0.66, P < .0001). Tubules showed active hedgehog signaling as determined by SHH and nuclear GLI2 expression and expressed the profibrogenic cytokine SPP1. SPP1 protein content and SPP1 expression were greater in GALD than NNL (15- and 13-fold respectively; P = .002). GALD liver contained large numbers of activated myofibroblasts and showed greater than 10-fold more fibrosis than NNL. The extent of fibrosis correlated with the area density of KRT19+ tubules (r(2) = 0.387, P = .001). The data support a pathogenic model in which immune injury to fetal hepatocytes provides a stimulus for expansion of parenchymal tubules, which, by way of Hh activation, produce fibrogenic signals leading to vibrant fibrosis.