Recent biotechnical advances in the in vitro culture of cholangiocytes and generation of bioengineered biliary tissue have a high potential for creating biliary tissue to be used for disease modeling, drug screening, and transplantation. For the past few decades, scientists have searched for a source of cholangiocytes, focused on primary cholangiocytes or cholangiocytes derived from hepatocytes or stem cells. At the same time, the development of scaffolds for biliary tissue engineering for transplantation and modeling of cholangiopathies has been explored. In this review, we provide an overview on the current understanding of cholangiocytes sources, the effect of signaling molecules, and transcription factors on cell differentiation, along with the effects of extracellular matrix molecules and scaffolds on bioengineered biliary tissues, and their application in disease modeling and drug screening. Impact statement Over the past few decades, biliary tissue engineering has acquired significant attention, but currently a number of factors hinder this field to eventually generate bioengineered bile ducts that mimic in vivo physiology and are suitable for transplantation. In this review, we present the latest advances with respect to cell source selection, influence of growth factors and scaffolds, and functional characterization, as well as applications in cholangiopathy modeling and drug screening. This review is suited for a broad spectrum of readers, including fundamental liver researchers and clinicians with interest in the current state and application of bile duct engineering and disease modeling.