There has been remarkable progress in our understanding of how chronic alcohol ingestion may lead to hepatic injury and scarring, or fibrosis. Hepatic fibrosis represents the liver's wound healing response and is characterized by accumulation of interstitial matrix, or scar. Fibrosis in the liver results from the activation of stellate cells, or resident mesenchymal cells. Stellate cell activation is a dramatic phenotype transition whose net effect is the replacement of normal liver matrix by scar. Features of stellate cell activation include increased cell accumulation from proliferation and directed migration, increased matrix production, enhanced contractility, accelerated degradation of the normal liver matrix, release of profibrogenic cytokines, and loss of cellular vitamin A. Alcohol may enhance fibrogenesis through stimulation of stellate cells by hypoxia, generation of lipid peroxides from damaged hepatocytes, production of acetaldehyde that may have direct fibrogenic activity, and through activation of Kupffer cells or resident macrophages. Unanswered questions remain to be studied, but the clarification of underlying mechanisms of fibrosis portends continued progress in our ability to treat alcoholic liver fibrosis.