A detailed ab initio study of the molecular structure and rotational barriers of biphenyl has been performed. First, non-dynamical correlation effects involving the pi system are taken into account at the CASSCF level. These wave functions are subsequently employed as reference functions in a multiconfigurational second-order perturbation treatment (CASPT2). The performance single-reference approaches is in addition analysed. The molecular geometries of biphenyl in twisted, coplanar, and perpendicular conformations have been optimized at the CASSCF level. A rotational angle of 44.3 degrees is predicted for the minimum energy conformer in agreement with gas-phase electron diffraction data (44.4 +/- 1.2 degrees). The highest level of theory employed yields the values 12.93 (6.0 +/- 2.1) and 6.40 (6.5 +/- 2.5) kJ/mol for the barrier heights at 0 degrees and 90 degrees, respectively (electron diffraction data within parentheses). In the light of the present findings, the reliability of the available experimental data is discussed.