|Background and Aims: Cholestatic liver diseases, including primary sclerosing cholangitis, are characterized by periportal inflammation with progression to hepatic fibrosis and ultimately cirrhosis. We recently reported that the thioredoxin antioxidant response is dysregulated during primary sclerosing cholangitis. The objective of this study was to examine the impact of genetic and pharmacological targeting of thioredoxin reductase 1 (TrxR1) on hepatic inflammation and liver injury during acute cholestatic injury. Approach and Results: Primary mouse hepatocytes and intrahepatic macrophages were isolated from 3-day bile duct ligated (BDL) mice and controls. Using wildtype and mice with a liver-specific deletion of TrxR1 (TrxR1LKO), we analyzed the effect of inhibition or ablation of TrxR1 signaling on liver injury and inflammation. Immunohistochemical analysis of livers from BDL mice and human cholestatic patients revealed increased TrxR1 staining in periportal macrophages and hepatocytes surrounding fibrosis. qPCR analysis of primary hepatocytes and intrahepatic macrophages revealed increased TrxR1 mRNA expression following BDL. Compared with sham controls, BDL mice exhibited increased inflammation, necrosis, and increased mRNA expression of pro-inflammatory cytokines, fibrogenesis, the NLRP3 inflammatory complex, and increased activation of NFkB, all of which were ameliorated in TrxR1LKO mice. Importantly, following BDL, TrxR1LKO induced periportal hepatocyte expression of Nrf2-dependent antioxidant proteins and increased mRNA expression of basolateral bile acid transporters with reduced expression of bile acid synthesis genes. In the acute BDL model, the TrxR1 inhibitor auranofin (10 mg/kg/1 d preincubation, 3 d BDL) ameliorated BDL-dependent increases in Nlrp3, GsdmD, Il1β, and TNFα mRNA expression despite increasing serum alanine aminotransferase, aspartate aminotransferase, bile acids, and bilirubin. Conclusions: These data implicate TrxR1-signaling as an important regulator of inflammation and bile acid homeostasis in cholestatic liver injury.