Excessive alcohol users have a higher risk for developing respiratory infections compared to individuals who do not chronically misuse alcohol, due to impaired host immune defense. In the lung, alveolar epithelial cells play a critical role in host immune defense against invading pathogens in the lower respiratory tract due to their capacity to maintain barrier integrity, and alveolar macrophages play a key role in pulmonary innate immunity by phagocytizing and clearing infiltrating microbes. Chronic alcohol misuse induces mitochondrial damage that results in release of mitochondrial DNA (mtDNA) in exosomes. We hypothesized that alcohol-induced cellular damage leads to release of exosomes containing damaged mtDNA, which can mediate injurious crosstalk between lung epithelial cells and macrophages. The mouse alveolar epithelial cell line, MLE-12, and the mouse alveolar macrophage cell line, MH-S, were transfected with a damaged mtDNA overexpression plasmid or exposed to ethanol in vitro. Overexpression of damaged mtDNA impaired MLE-12 barrier function and MH-S phagocytic capacity. Ethanol induced damage of mtDNA in MLE-12 and MH-S cells, and promoted release of exosomes enriched with damaged mtDNA from these cells. Exosomes from ethanol-exposed MH-S cells caused mtDNA damage and barrier dysfunction in MLE-12 cells, and exosomes from ethanol-exposed MLE-12 cells caused mtDNA damage and phagocytic dysfunction in MH-S cells. Collectively, these data show that ethanol-induced mtDNA damage in MLE-12 and MH-S cells stimulates release of damaged mtDNA-enriched exosomes and contributes to injurious crosstalk between the alveolar epithelium and macrophages, potentially leading to impaired host immune defense against respiratory infections.