Heme Oxygenase is the rate-limiting enzyme in the degradation of heme into carbon monoxide (CO), iron and bilirubin. To date, three heme oxygenase isozymes have been identified: HO-1, HO-2 and HO-3. While HO-1 is structurally different from its counterparts, HO-2 and HO-3 are very similar (90% homology), with HO-3 being a poor heme catalyst. Of the three isozymes, HO-1 is believed to be the only inducible form. Constitutively expressed HO-2 has been identified in several organs including kidney and vascular smooth muscle, with the most abundant sources (and activity) being in the liver, brain, spleen and testes. Within the normal liver, HO-2 is constitutively expressed within hepatocytes, Kupffer cells, endothelial cells and Ito cells. Until recently, products of the HO reaction were regarded as potentially toxic waste destined only for excretion. However, this view is changing as evidence suggests that HO activity plays an important protective role against cellular stress during inflammatory diseases. Biliverdin is reduced to bilirubin, which has been shown to possess potent antioxidative properties. CO, which is produced in equimolar concentrations to biliverdin and ferrous iron during heme oxidation by HO, may function as a second messenger stimulating soluble guanylate cyclase (sGC) and regulating vascular tone in combination with the free radical gas NO. CO may also possess anti-inflammatory properties such as the capacity to inhibit platelet aggregation, or the expression of pro-inflammatory cytokines. Recently, it has been shown that CO regulates bile formation and bile flow. We review the functional role of HO in liver and the potential application of HO-1 in therapeutic approaches to the treatment of inflammation.