Background: Conjugated hyperbilirubinemia in early infancy is a critical indicator of hepatobiliary dysfunction. Prompt and accurate identification is essential to diagnose cholestatic liver disease (CLD), particularly biliary atresia. Current guidelines define conjugated bilirubin (CB) ≥ 1 mg/dL as abnormal, irrespective of total bilirubin (TB). This study aimed to evaluate whether combining absolute and relative CB thresholds improves diagnostic performance for CLD. Methods: We retrospectively analyzed all infants aged ≤6 months of chronological age with CB ≥ 1 mg/dL admitted to the Department of Pediatrics and Adolescent Medicine, Medical University of Graz, Austria, between January 2004 and February 2025. During that period, 116,104 infants were born at our hospital catchment area; 3119 of these underwent bilirubin fractionation, and 257 infants (0.2% of total births) had a CB ≥ 1 mg/dL and were included in the analysis. Clinical and biochemical data were extracted. Diagnostic performance of the absolute (CB ≥ 1 mg/dL) and in combination with the relative (CB ≥ 20% of TB) thresholds was assessed using receiver operating characteristic (ROC) analysis for the detection of CLD. Results: Among 257 infants, 47 (18%) were diagnosed with CLD. The median age at the time of blood sampling was 18 days (IQR 9–31). The combined criterion (CB ≥ 1 mg/dL and ≥20% of TB) achieved 100% sensitivity and 61.2% specificity (AUC = 0.82, 95% CI 0.79–0.92; p < 0.001). Implementation of the combined cut-off reduced the number needed to screen from 5.5 to 2.7, representing nearly a twofold improvement in diagnostic efficiency. Conclusions: Applying both absolute (≥1 mg/dL) and relative (≥20% of total bilirubin) CB thresholds substantially improves detection of neonatal CLD in early infancy. This combined approach maintains full sensitivity while reducing false positives and unnecessary investigations, thereby enhancing diagnostic efficiency in early infancy.