Alcohol consumption is generally well tolerated by the liver but in some individuals it results in persistent inflammation and liver disease. The mechanisms that regulate alcohol-induced liver inflammation are poorly understood. The transcription factor FOXO3 has previously been shown to be involved in suppressing alcohol-induced liver injury. In this study we demonstrate that in response to alcohol, approximately 10% of mouse hepatic macrophages undergo FOXO3-dependent apoptosis. By 3 days of alcohol exposure total hepatic macrophage numbers declined by 30% but these were restored to normal after 10 days of continued exposure. Whole body or myeloid specific Foxo3-/- mice failed to show this apoptotic response. After 10 days of alcohol exposure, Foxo3-/- mice had an increased basal inflammatory phenotype and an increase in the proportion of pro-inflammatory CD11b+, Ly6C+ infiltrating macrophages (IMs) infiltrating. This led to marked sensitivity to LPS with a 5-fold ALT elevation and liver injury after LPS challenge in Foxo3-/- but not WT mice. Restoring the early macrophage apoptosis burst with a pulse of intravenous GdCl3 at day 2 had no effect on the day 10 phenotype of WT mice but it corrected the hyper-inflammatory phenotype in Foxo3-/- mice. In conclusion, FOXO3-dependent hepatic macrophage apoptosis in response to ethanol serves to promote differentiation of infiltrating macrophages thus limiting the magnitude of the inflammatory response to ethanol.