Alcoholic fatty liver is a potentially pathologic condition which can progress to steatohepatitis, fibrosis, and cirrhosis if alcohol consumption is continued. Alcohol exposure may induce fatty liver by increasing NADH/NAD(+) ratio, increasing sterol regulatory element-binding protein-1 (SREBP-1) activity, decreasing peroxisome proliferator-activated receptor-alpha (PPAR-alpha) activity, and increasing complement C3 hepatic levels. Alcohol may increase SREBP-1 activity by decreasing the activities of AMP-activated protein kinase and sirtuin-1. Tumor necrosis factor-alpha (TNF-alpha) produced in response to alcohol exposure may cause fatty liver by up-regulating SREBP-1 activity, whereas betaine and pioglitazone may attenuate fatty liver by down-regulating SREBP-1 activity. PPAR-alpha agonists have potentials to attenuate alcoholic fatty liver. Adiponectin and interleukin-6 may attenuate alcoholic fatty liver by up-regulating PPAR-alpha and insulin signaling pathways while down-regulating SREBP-1 activity and suppressing TNF-alpha production. Recent studies show that paracrine activation of hepatic cannabinoid receptor 1 by hepatic stellate cell-derived endocannabinoids also contributes to the development of alcoholic fatty liver. Furthermore, oxidative modifications and inactivation of the enzymes involved in the mitochondrial and/or peroxisomal beta-oxidation of fatty acids could contribute to fat accumulation in the liver.