Biliary atresia is a progressive infantile cholangiopathy of complex pathogenesis. Although early diagnosis and surgery are the best predictors of treatment response, current diagnostic approaches are imprecise and time-consuming. We used large-scale, quantitative serum proteomics at the time of diagnosis of biliary atresia and other cholestatic syndromes (serving as disease controls) to identify biomarkers of disease. In a discovery cohort of 70 subjects, the lead biomarker was matrix metalloproteinase-7 (MMP-7), which retained high distinguishing features for biliary atresia in two validation cohorts. Notably, the diagnostic performance reached 95% when MMP-7 was combined with γ-glutamyltranspeptidase (GGT), a marker of cholestasis. Using human tissue and an experimental model of biliary atresia, we found that MMP-7 is primarily expressed by cholangiocytes, released upon epithelial injury, and promotes the experimental disease phenotype. Thus, we propose that serum MMP-7 (alone or in combination with GGT) is a diagnostic biomarker for biliary atresia and may serve as a therapeutic target.