Alcoholic hepatitis is a distinct subset of alcoholic liver disease. Inflammation and oxidative stress are the two main pathogenetic mechanisms involved in its pathogenesis. Patients with mild disease usually improve with conservative management. However, about 30-50% of those with severe disease succumb to their illness within about 1 month. Therefore, assessment of disease severity is important and practical issue. Currently, hepatologists do not have an ideal scoring system available. With survival benefit of only about 50% with corticosteroids and pentoxifylline, there is need to develop newer and better treatment options to manage these patients. This article also deals with controversies surrounding the role and use of liver transplantation in patients with alcoholic hepatitis.