Alcoholic steatosis was associated with sclerosis around the terminal hepatic venules in liver biopsies of 40% of chronic alcoholics but not in those of moderate drinkers. To determine whether this sclerosis could be a precursor lesion of cirrhosis, controlled studies were performed in animal models. In the alcohol-fed baboons that developed fibrosis or cirrhosis, progressive perivenular sclerosis invariably started at the fatty liver stage before or even more commonly in the absence of alcoholic hepatitis. No sclerosis occurred in controls or in alcohol-fed baboons and rats that did not progress beyond the fatty liver stage. The clinical and experimental data indicate that sclerosis around the terminal venules, a common but often overlooked complication of alcoholic fatty liver, reflects heavy prolonged drinking, and may identify those patients who are susceptible to develop the more advanced lesions of alcoholic liver injury upon continued drinking.