The burden of alcoholic liver disease continues to be a major public health problem worldwide. The spectrum of disease ranges from fatty liver to cirrhosis and hepatocellular carcinoma. Alcoholic hepatitis (AH) is a type of acute-on-chronic liver failure and the most severe form of alcoholic liver disease. Severe AH carries a poor short-term prognosis and its management is still challenging, with scarce advances in the last decades. Corticosteroids are still the first line of therapy in severe cases. Unfortunately, many patients do not respond and novel targeted therapies are urgently needed. Liver transplantation has shown extraordinary results in non-responders to corticosteroids however; its applicability is very low. This review summarizes the epidemiology, natural history, risk factors and pathogenesis of alcoholic liver disease with special focus on the latest advances in prognostic stratification and therapy of patients with alcoholic hepatitis.