Although it is well established that the majority of alcoholics are neurologically compromised, little is known about the etiological factors underlying the central nervous system (CNS) disturbances. Without doubt, ethanol is a neurotoxin; however, the complex array of factors presaging drinking onset and factors concomitant to a lifestyle of alcohol abuse probably also influence the risk for neurologic injury. This chapter reviews the emerging evidence linking liver disease to the neurologic pathology manifested by chronic alcoholics. The observation that the pattern and severity of cognitive deficits is similar between alcoholics and nonalcoholics with cirrhosis, combined with the demonstration that biochemical indices of liver injury correlate with cognitive test performance in alcoholics, illustrates the important role of liver disease as a codeterminant of the CNS disturbance. In addition, the findings from developing research indicating that liver transplantation can reverse the deficits on neuropsychological tests further underscore the importance of advanced liver disease as a determinant of the CNS pathology, and the results suggest the need for aggressive treatment of alcoholic liver disease for restoring the alcoholic's functional cognitive abilities, which, in turn, may improve the prognosis for psychosocial adjustment.