BACKGROUND AND AIMS: Liver macrophages are heterogeneous and play an important role in alcohol-associated liver disease (ALD) but there is limited understanding of the functions of specific macrophage subsets in the disease. We used a Western diet alcohol (WDA) mouse model of ALD to examine the hepatic myeloid cell compartment by single cell RNAseq and targeted KC ablation to understand the diversity and function of liver macrophages in ALD. APPROACH AND RESULTS: In the WDA liver, KCs and infiltrating monocytes/macrophages each represented about 50% of the myeloid pool. Five major KC clusters all expressed genes associated with receptor-mediated endocytosis and lipid metabolism, but most were predicted to be noninflammatory and antifibrotic with 1 minor KC cluster having a proinflammatory and extracellular matrix degradation gene signature. Infiltrating monocyte/macrophage clusters, in contrast, were predicted to be proinflammatory and profibrotic. In vivo, diphtheria toxin-based selective KC ablation during alcohol exposure resulted in a liver failure phenotype with increases in PT/INR and bilirubin, loss of differentiated hepatocyte gene expression, and an increase in expression of hepatocyte progenitor markers such as EpCAM, CK7, and Igf2bp3. Gene set enrichment analysis of whole-liver RNAseq from the KC-ablated WDA mice showed a similar pattern as seen in human alcoholic hepatitis. CONCLUSIONS: In this ALD model, KCs are anti-inflammatory and are critical for the maintenance of hepatocyte differentiation. Infiltrating monocytes/macrophages are largely proinflammatory and contribute more to liver fibrosis. Future targeting of specific macrophage subsets may provide new approaches to the treatment of liver failure and fibrosis in ALD.