Alcoholic liver disease has a known etiology but a complex pathogenesis. The understanding of how alcohol damages the liver has expanded substantially over the last decade. In particular the genesis of fatty liver, the effect of the metabolites of ethanol oxidation, the interaction between endotoxin and kupffer cells, and the genetic predisposition to develop severe liver disease have been the focus of a great deal of research. Recent studies have demonstrated that in addition to the altered redox state ethanol induced lipid accumulation by altering the expression and transcriptional regulation of nuclear receptors such as peroxisome proliferator-activated receptor a and sterol regulatory element binding protein 1 which are involved in the expression of enzymes regulating lipid metabolism. Aldehydes generated by ethanol oxidizing pathways are involved in several toxic effects of alcohol by forming protein adducts which are responsible for activation of specific intracellular signaling pathways which modulate collagen synthesis and inflammatory response. This latter effect was also coordinated by kupffer cells, which are activated by portal vein endotoxin to release cytokines and chemokines. These actions appear to be in part dependent on genetic factors including polymorphism of genes belonging to ethanol metabolizing enzymes and to inflammatory/immune response. These complex pathways leading to liver injury offer many targets for potential therapeutic approaches.