Liver failure profoundly affects the immune system, leading to dysregulation of innate and adaptive immune response. This review explores the intricate relationship between liver function and immune homeostasis. The role of the liver as a central hub in immune response initiation is elucidated, emphasizing its involvement in hepatic inflammation induction and subsequent systemic inflammation. Cytokines, chemokines, growth factors, and lipid mediators orchestrate these immune processes, serving as both prognostic biomarkers and potential therapeutic targets in liver failure-associated immune dysregulation, which might result from acute-on-chronic liver failure (ACLF) and cirrhosis. Furthermore, the review delves into the mechanisms underlying immunosuppression in liver failure, encompassing alterations in innate immune cell functions such as neutrophils, macrophages, and natural killer cells (NK cells), as well as perturbations in adaptive immune responses mediated by B and T cells. Conclusion: Understanding the immunological consequences of liver failure is crucial for developing targeted therapeutic interventions and improving patient outcomes in liver disease management.