Alcoholic liver disease (ALD) pathologies include hepatic steatosis, inflammation and liver injury. The liver receives ~60% of fatty acids from adipose tissue. We examined the role of adipose lipolysis in ALD pathogenesis using adipose-specific CGI-58 knockout (FAT-KO) mice, a model of impaired adipose lipolysis. FAT-KO versus control mice were almost completely protected against ethanol-induced hepatic steatosis and lipid peroxidation when subjected to the 15-day NIAAA chronic-binge ethanol diet. This was unlikely from reduced lipid synthesis because ethanol feeding downregulated hepatic expression of lipogenic genes similarly in both genotypes. On a control diet, FAT-KO relative to control mice had increased hepatocyte injury, neutrophil infiltration, and activation of transcription factor STAT3 in the liver, none exacerbated by ethanol. This was associated with increased hepatic leptin receptor mRNA and adipose inflammatory cell infiltration. These findings identify a critical role for adipose lipolysis in hepatic steatosis and oxidative stress during ALD development.