Bile acid imbalance causes progressive familial intrahepatic cholestasis type 2 (PFIC2) or type 3 (PFIC3), severe liver diseases associated with genetic defects in the biliary bile acid transporter bile salt export pump (BSEP; ABCB11) or phosphatidylcholine transporter multidrug resistance protein 3 (MDR3; ABCB4), respectively. Mdr2-/- mice (a PFIC3 model) develop progressive cholangitis, ductular proliferation, periportal fibrosis, and hepatocellular carcinoma (HCC) because the nonmicelle-bound bile acids in the bile of these mice are toxic. We asked whether the highly hydrophilic bile acids generated by Bsep-/- mice could protect Mdr2-/- mice from progressive liver damage. We generated double-KO (DKO: Bsep-/- and Mdr2-/-) mice. Their bile acid composition resembles that of Bsep-/- mice, with increased hydrophilic muricholic acids, tetrahydroxylated bile acids (THBAs), and reduced hydrophobic cholic acid. These mice lack the liver pathology of their Mdr2-/- littermates. The livers of DKO mice have gene expression profiles very similar to Bsep-/- mice, with 4,410 of 6,134 gene expression changes associated with the Mdr2-/- mutation being suppressed. Feeding with THBAs partially alleviates liver damage in the Mdr2-/- mice. Hydrophilic changes to biliary bile acid composition, including introduction of THBA, can prevent the progressive liver pathology associated with the Mdr2-/- (PFIC3) mutation.