Worldwide, one of the most prevalent forms of chronic disease is alcoholic fatty liver, which may progress to more severe forms of liver injury including steatohepatitis, fibrosis, and cirrhosis. The molecular mechanisms by which ethanol consumption causes accumulation of hepatic lipid are multiple and complex. Chronic ethanol exposure is thought to cause enhanced hepatic lipogenesis and impaired fatty acid oxidation by inhibiting key hepatic transcriptional regulators such as AMP-activated kinase (AMPK), sirtuin 1 (SIRT1), PPAR-gamma coactivator alpha (PGC-1alpha), peroxisome proliferator-activated receptor alpha (PPARalpha), and sterol regulatory element-binding protein 1 (SREBP-1). Adiponectin is an adipose-derived hormone with a variety of beneficial biological functions. Increasing evidence suggests that altered adiponectin production in adipose tissue and impaired expression of hepatic adiponectin receptors (AdipoRs) are associated with the development of alcoholic liver steatosis in several rodent models. More importantly, studies have demonstrated a protective role of adiponectin against alcoholic liver steatosis. The hepato-protective effect of adiponectin is largely mediated by the coordination of multiple signaling pathways in the liver, leading to enhanced fat oxidation, reduced lipid synthesis and prevention of hepatic steatosis. This review begins with an assessment of the current understanding of the role of adiponectin and its receptors in the regulation of lipid homeostasis in liver, with emphasis on their relationship to the development of alcoholic liver steatosis. Following sections will review hepatic signaling molecules involved in the protective actions of adiponectin against alcoholic fatty liver and summarize the current knowledge of regulatory mechanisms of adiponectin expression and secretion in response to chronic ethanol exposure. We will conclude with a discussion of potential strategies for treating human alcoholic fatty liver disease (AFLD), including nutritional and pharmacological modulation of adiponectin and its receptors.