Liver regeneration is necessary to recover from alcoholic liver injury. Herein, we review evidence that ethanol interferes with liver regeneration. Briefly, alcoholic fatty livers demonstrate increased rates of hepatocyte death. The latter provides a regenerative stimulus. However, unlike mature hepatocytes in healthy adult livers, most surviving mature hepatocytes in alcoholic fatty livers cannot replicate. Therefore, less mature cells (progenitors) must differentiate to replace dead hepatocytes. Little is known about the general mechanisms that modulate the differentiation of liver progenitors in adults. Delineation of these mechanisms and clarification of how ethanol influences them might suggest new therapies for alcoholic liver disease.