Epidemiological evidence gathered only in the past decade reveals that alcohol abuse independently increases the risk of developing the acute respiratory distress syndrome (ARDS) by as much as 3-4-fold. Experimental models and clinical studies are beginning to elucidate the mechanisms underlying this previously unrecognized association and are revealing for the first time that chronic alcohol abuse causes discrete changes, particularly within the alveolar epithelium, that render the lung susceptible to acute edematous injury in response to sepsis, trauma, and other inflammatory insults. Recent studies in relevant animal models as well as in human subjects are identifying common mechanisms by which alcohol abuse targets both the alveolar epithelium and the alveolar macrophage, such that the risks for acute lung injury and pulmonary infections are inextricably linked. Specifically, chronic alcohol ingestion decreases the levels of the antioxidant glutathione within the alveolar space by as much as 80-90% and, as a consequence, impairs alveolar epithelial surfactant production and barrier integrity, decreases alveolar macrophage function, and renders the lung susceptible to oxidant-mediated injury. These changes are often sub-clinical and may not manifest as detectable lung impairment until challenged by an acute insult such as sepsis or trauma. However, even otherwise healthy alcoholics have evidence of severe oxidant stress in the alveolar space that correlates with alveolar epithelial and macrophage dysfunction. This review focuses on the epidemiology and the pathophysiology of alcohol-induced lung dysfunction and discusses potential new treatments that are suggested by recent experimental findings.