Obesogenic lipids and the sphingolipid ceramide have been implicated as potential cofactors in alcoholic liver disease (ALD) patients. However, the mechanisms by which these lipids modulate lipid trafficking in ethanol-treated human liver cells to promote steatosis, an early stage of ALD, are poorly understood. We measured fatty acid (FA) uptake, triglyceride export, FA synthesis and FA oxidation in human hepatoma (VL-17A) cells in response to ethanol and the exogenous lipids oleate, palmitate and C2 ceramide. We found that in combination with ethanol, both oleate and palmitate promote lipid droplet accumulation while C2 ceramide inhibits lipid droplet accumulation by enhancing FA oxidation. Further, using both a pharmacologic and siRNA approach to reduce peroxisome proliferator-activated receptors α (PPARα) gene expression, we demonstrate that C2 ceramide abrogates ethanol-mediated suppression of FA oxidation through an indirect PPARα mechanism. Together, these data suggest that lipids interact differentially with ethanol to modulate hepatocellular lipid droplet accumulation and may provide novel targets for preventing the earliest stage of alcoholic liver disease, alcoholic steatosis.