The nuclear receptor Farnesoid X Receptor (FXR) critically regulates nascent bile formation and bile acid enterohepatic circulation. Bile acids and FXR play a pivotal role in regulating hepatic inflammation and regeneration as well as in regulating extent of inflammatory responses, barrier function and prevention of bacterial translocation in the intestinal tract. Recent evidence suggests, that the bile acid-FXR interaction is involved in the pathophysiology of a wide range of diseases of the liver, biliary and gastrointestinal tract, such as cholestatic and inflammatory liver diseases and hepatocellular carcinoma, inflammatory bowel disease and inflammation-associated cancer of the colon and esophagus. In this review we discuss current knowledge of the role the bile acid-FXR interaction has in (patho)physiology of the liver, biliary and gastrointestinal tract, and proposed underlying mechanisms, based on in vitro data and experimental animal models. Given the availability of highly potent synthetic FXR agonists, we focus particularly on potential relevance for human disease.