The liver plays a central role in ethanol metabolism, and oxidative stress is implicated in alcohol-mediated liver injury. β-Catenin regulates hepatic metabolic zonation and adaptive response to oxidative stress. We hypothesized that β-catenin regulates the hepatic response to ethanol ingestion. Female liver-specific β-catenin knockout (KO) mice and wild-type (WT) littermates were fed the Lieber-Decarli liquid diet (5% ethanol) in a pairwise fashion. Liver histology, biochemistry, and gene-expression studies were performed. Plasma alcohol and ammonia levels were measured using standard assays. Ethanol-fed (EtOH) KO mice exhibited systemic toxicity and early mortality. KO mice exhibited severe macrovesicular steatosis and 5 to 6-fold higher serum alanine aminotransferase and aspartate aminotransferase levels. KO mice had a modest increase in hepatic oxidative stress, lower expression of mitochondrial superoxide dismutase (SOD2), and lower citrate synthase activity, the first step in the tricarboxylic acid cycle. N-Acetylcysteine did not prevent ethanol-induced mortality in KO mice. In WT livers, β-catenin was found to coprecipitate with forkhead box O3, the upstream regulator of SOD2. Hepatic alcohol dehydrogenase and aldehyde dehydrogenase activities and expression were lower in KO mice. Hepatic cytochrome P450 2E1 protein levels were up-regulated in EtOH WT mice, but were nearly undetectable in KO mice. These changes in ethanol-metabolizing enzymes were associated with 30-fold higher blood alcohol levels in KO mice. Conclusion: β-Catenin is essential for hepatic ethanol metabolism and plays a protective role in alcohol-mediated liver steatosis. Our results strongly suggest that integration of these functions by β-catenin is critical for adaptation to ethanol ingestion in vivo.