The understanding of how alcohol damages the liver has expanded substantially over the last decade. In particular, the genetics of alcoholism, the genesis of fatty liver, the role of oxidant stress, interactions between endotoxin and the Kupffer cell, and the factors that control activation of the hepatic stellate cell (HSC) have been the focus of a great deal of research. Genetic mechanisms for increasing the risk of alcoholism include alterations in alcohol metabolizing enzymes as well as neurobiological differences between individuals. The development of fatty liver may involve both redox forces, oxidative stress, and alterations in peroxisome proliferator activated receptor function. Oxidative stress is now known to involve both microsomal and mitochondrial systems. Recent studies implicate stimulation of Kupffer cells by portal vein endotoxin as a cause of release of cytokines and chemokines, hepatocyte hyper-metabolism, and activation of HSC. These actions appear to be in part gender-dependent and may explain the susceptibility of women to alcoholic liver disease. Activation of HSC underlies liver fibrosis and cirrhosis of all types; control of this activation might permit control of the progression of fibrosis. These advances suggest a number of new approaches as therapy for alcoholic liver injury.