Alcohol (ethanol) was administered chronically to female Sprague-Dawley rats in a nutritionally adequate, totally liquid diet for 28 days. This resulted in significant hepatic steatosis and lipid peroxidation. When taurine was administered for 2 days following alcohol withdrawal it was found to reduce alcohol-induced lipid peroxidation and completely reversed hepatic steatosis. The reversal of hepatic steatosis was demonstrated both biochemically and histologically. Two days following alcohol withdrawal, the apparent activity of the alcohol-inducible form of cytochrome P450 (CYP2E1) was unchanged although total cytochrome P450 content was increased. In addition, alcohol significantly inhibited hepatic methionine synthase activity and increased homocysteine excretion in urine. Although alcohol did not affect the urinary excretion of taurine (a non-invasive marker of liver damage), levels of serum and hepatic taurine were markedly raised in animals given taurine following their treatment with alcohol, compared to animals given taurine alone. There was evidence of slight bile duct injury in animals treated with alcohol and with alcohol followed by taurine, as indicated by raised serum alkaline phosphatase (ALP) and cholesterol. Aspartate aminotransferase (AST) was also slightly raised. The effects of taurine on reversing hepatic steatosis may be due to the enhanced secretion of hepatic triglycerides. It is suggested that increased bile flow as a result of taurine treatment may have contributed to the removal of lipid peroxides. These in-vivo findings demonstrate for the first time that hepatic steatosis and lipid peroxidation, occurring as a result of chronic alcohol consumption, can be reversed by administration of taurine to rats for 2 days.