The pathogenesis of alcoholic liver disease (ALD) is not well established. However, oxidative stress and associated decreases in levels of glutathione (GSH) are known to play a central role in ALD. The present study examines the effect of GSH deficiency on alcohol-induced liver steatosis in Gclm knockout (KO) mice that constitutively have ≈15% normal hepatic levels of GSH. Following chronic (6 week) feeding with an ethanol-containing liquid diet, the Gclm KO mice were unexpectedly found to be protected against steatosis despite showing increased oxidative stress (as reflected in elevated levels of CYP2E1 and protein carbonyls). Gclm KO mice also exhibit constitutive activation of liver AMP-activated protein kinase (AMPK) pathway and nuclear factor-erythroid 2-related factor 2 target genes, and show enhanced ethanol clearance, altered hepatic lipid profiles in favor of increased levels of polyunsaturated fatty acids and concordant changes in expression of genes associated with lipogenesis and fatty acid oxidation. In summary, our data implicate a novel mechanism protecting against liver steatosis via an oxidative stress adaptive response that activates the AMPK pathway. We propose redox activation of the AMPK may represent a new therapeutic strategy for preventing ALD.