The human hemostasis system is complex and poorly understood after decades of intense scientific study. Despite multiple defects in routine coagulation laboratory studies in patients with chronic liver disease, there is growing evidence that these patients are effectively “rebalanced” with regard to procoagulant and anticoagulant activity and that most of these patients remain in a tenuous but balanced state of hemostasis. A major difficulty in the assessment of these patients is that there are no established laboratory tests that accurately reflect the changes in both the procoagulant and anticoagulant systems; therefore, routine laboratory testing is misleading to the clinician and may prompt inappropriate or risky therapies with little real benefit to the patient. The international normalized ratio is an example of this type of misleading test. Although the international normalized ratio is inextricably linked to prognosis and severity of protein synthetic dysfunction in acute and chronic liver disease, it is a very poor marker for bleeding risk and should not be used in isolation for this purpose. Coagulation disorders are critical in the management of frequent clinical scenarios such as esophageal variceal bleeding, invasive and percutaneous procedures, portal vein thrombosis, venous thromboembolism, and acute liver failure. This article summarizes the pathophysiology of hemostasis in liver disease, describes the strengths and weaknesses of various laboratory tests in assessment of these patients, and outlines the optimal management of hemostasis for some common clinical scenarios. Further research is needed for proper understanding of hemostasis in liver disease to optimally and safely manage these complex patients.