Alcoholic liver disease (ALD) is associated with a spectrum of liver injury ranging from steatosis and steatohepatitis to fibrosis and cirrhosis. While multifactorial pathogenesis plays a role in the disease progression, enhanced inflammation in the liver during ethanol exposure is a major feature of ALD. Dysregulated cytokine metabolism and activity are crucial to the initiation of alcohol-induced liver injury. The pro-inflammatory cytokine tumor necrosis factor (TNF-α) has been demonstrated to be one of the key factors in the various aspects of pathophysiology of ALD. The immunomodulatory cytokines such as interleukin 10 and interleukin 6 play roles in exerting hepatic protective effects. Adiponectin is an adipose tissue-derived hormone, which displays protective actions on ethanol-induced liver injury. Treatment for mice with adiponectin decreases TNF-α expression, steatosis and prevents alcohol-induced liver injury. Adiponectin exerts its anti-inflammatory effects via suppression of TNF-α expression and induction of anti-inflammatory cytokines such as IL-10. Adiponectin attenuates alcoholic liver injury by the complex network of multiple signaling pathways in the liver, leading to enhanced fatty acid oxidation and reduced steatosis. Interactions between pro- and anti-inflammatory cytokines such as TNFα and adiponectin and other cytokines are likely to play important roles in the development and progression of alcoholic liver disease.