Alcohol metabolism takes place primarily in the liver. Initial exposures to ethanol have a major impact on the hepatic redox state and intermediary metabolism as a consequence of ethanol metabolism via alcohol dehydrogenase. However, upon continued exposure to ethanol, the progression of liver injury involves ethanol metabolism via CYP2E1 and consequent oxidant stress, as well as potential direct effects of ethanol on membrane proteins that are independent of ethanol metabolism. Multiple organ systems contribute to liver injury, including the innate immune system and adipose tissue. In response to ethanol exposure, specific signal transduction pathways, including NFkappaB and the mitogen-activated protein kinase family members ERK1/2, JNK, and p38, are activated. These complex responses to ethanol exposure translate into activation of nuclear transcription factors and altered gene expression within the liver, leading to the development of steatosis and inflammation in the early stages of alcohol-induced liver injury.