Alcohol-related liver disease (ALD) represents one of the leading causes of chronic liver disease and is a major cause of liver-related deaths worldwide. ALD encompasses a range of disorders including simple steatosis, alcoholic steatohepatitis, fibrosis, cirrhosis, and hepatocellular carcinoma. Patients with underlying ALD and continued heavy alcohol consumption can also develop an episode of acute-on-chronic liver injury called alcohol-associated hepatitis, the most severe form of the disease, which portends a poor prognosis. The most important risk factor for the development of ALD is the amount of alcohol consumed. Individual susceptibility to progression to advanced fibrosis among heavy drinkers is likely determined by a combination of behavioral, environmental, genetic, and epigenetic factors, but the mechanisms are largely unknown. The only effective therapy for ALD is prolonged alcohol abstinence. Diagnosis of ALD involves assessing patients for alcohol use disorder and signs of advanced liver disease. In clinical practice, the histological assessment for ALD diagnosis is uncommon, and it is usually based on the medical history, clinical manifestations, and laboratory and imaging tests. Several promising biomarkers that can have both diagnostic and prognostic value in patients with ALD have been identified in recent years. This review provides an overview of the clinical spectrum of ALD, the diagnostic approach of the disease from different perspectives as well as current diagnostic and prognostic biomarkers.