Excessive alcohol use increases the risk of acute lung injury and pneumonia. Chronic alcohol ingestion causes oxidative stress within the alveolar space, including near depletion of glutathione (GSH), which impairs alveolar epithelial and macrophage function, in experimental animals and human subjects. However, the fundamental mechanism(s) by which alcohol induces such profound lung oxidative stress is unknown. Nuclear factor (erythroid-derived 2)-like 2 (Nrf2) is a redox-sensitive master transcription factor that regulates activation of the antioxidant response element (ARE). As the alveolar epithelium controls GSH levels within the alveolar space, we hypothesized that alcohol also decreases Nrf2 expression and/or activation within the alveolar epithelium. In this study, we determined that alcohol ingestion in vivo or direct alcohol exposure in vitro down-regulated the Nrf2-ARE pathway in lung epithelial cells, decreased the expression of antioxidant genes, and lowered intracellular GSH levels. RNA silencing of Nrf2 gene expression in alveolar epithelial cells in vitro decreased expression of these same antioxidant genes, and likewise lowered intracellular GSH levels, findings that mirrored the effects of alcohol. In contrast, treating alcohol-exposed alveolar epithelial cells in vitro with the Nrf2 activator, sulforaphane, preserved Nrf2 expression, ARE activation, intracellular GSH levels, and epithelial barrier function. These new experimental findings implicate down-regulation of the Nrf2-ARE signaling pathway as a fundamental mechanism by which alcohol causes profound oxidative stress and alveolar epithelial dysfunction, and suggest that treatments, such as sulforaphane, that activate this pathway could mitigate the pathophysiological consequences of alcohol on the lung and other organs.