Jaundice. Jaundice is a yellowish discoloration of the skin, eyes, and sometimes inside the mouth. It is one of the most common signs of an unhealthy liver and may even indicate liver disease. It is caused by a buildup of bilirubin inside the body. The liver normally processes and excretes bilirubin in bile. But when the liver isn’t functioning properly, the bilirubin builds up in the body. Bilirubin is produced when red blood cells are being broken down, which is a normal process in the body. When red blood cells are broken down excessively, jaundice can occur. This can happen even when the liver is functioning normally.