The biliary tree is an essential component of transplantable human liver tissue. Despite recent advances in liver tissue engineering, attempts at re-creating the intrahepatic biliary tree have not progressed significantly. The finer branches of the biliary tree are structurally and functionally complex and heterogeneous and require harnessing innate developmental processes for their regrowth. Here we demonstrate the ability of decellularized liver extracellular matrix (dECM) hydrogels to induce the in vitro formation of complex biliary networks using encapsulated immortalized mouse small biliary epithelial cells (cholangiocytes). This phenomenon is not observed using immortalized mouse large cholangiocytes, or with purified collagen 1 gels or Matrigel. We also show phenotypic stability via immunostaining for specific cholangiocyte markers. Moreover, tight junction formation and maturation was observed to occur between cholangiocytes, exhibiting polarization and transporter activity. To better define the mechanism of duct formation, we utilized three fluorescently labeled, but otherwise identical populations of cholangiocytes. The cells, in a proximity dependent manner, either branch out clonally, radiating from a single nucleation point, or assemble into multi-colored structures arising from separate populations. These findings present liver dECM as a promising biomaterial for intrahepatic bile duct tissue engineering and as a tool to study duct remodeling in vitro.