Alcoholic liver injury involves a complex array of derangements in cellular signaling of hepatic parenchymal and nonparenchymal cells as well as cells of the immune system. In the hepatocyte, chronic ethanol abuse leads to lipid accumulation and liver steatosis. Multiple pathways are affected to promote lipid accumulation in the ethanol-exposed hepatocyte. Chronic ethanol renders Kupffer cells hyperresponsive to endotoxin, which results in production of inflammatory cytokines and the tumor necrosis factor-alpha via a toll-like receptor 4 dependent pathway, leading to inflammation and hepatic necrosis. Dysfunction of the innate and adaptive immune responses caused by ethanol contributes to impaired antiviral response, inflammatory injury, and autoimmune activation. Recent developments in the literature are reviewed in a model that suggests lipid accumulation, dysregulation of immunity, and impaired antiviral and autoimmune responses as three distinct, though interwoven, pathophysiological mechanisms of alcoholic liver injury.