The liver is the most immune-privileged organ. The presence of abundant immune cells protects the liver against several disease-causing pathogens and immune-related injury. Coupled with currently available immunosuppression, liver allograft rejection is less common compared to other solid organ transplants. Most rejection episodes occur in the first few weeks to months following LT. T-cell-mediated rejection is the most common type of rejection. Strong suspicion at the time of allograft dysfunction, timely liver biopsy, and treatment improves liver function. Pulsed corticosteroids, upscaling baseline immunosuppression with the addition of mycophenolate mofetil to calcineurin inhibitors, are required to manage rejection episodes. Chronic rejection may lead to allograft failure, usually related to non-compliance with immunosuppressive medications. Donor-specific antibodies may be a useful tool in patients with refractory rejection. A systematic approach to allograft dysfunction is required to manage these patients.