Alcohol-related liver disease (ALD) is associated with steatohepatitis and insulin resistance. Insulin resistance impairs growth and disrupts lipid metabolism in hepatocytes. Dysregulated lipid metabolism promotes ceramide accumulation and oxidative stress, leading to lipotoxic states that activate endoplasmic reticulum (ER) stress pathways and worsen inflammation and insulin resistance. In a rat model of chronic alcohol feeding, we characterized the effects of a ceramide inhibitor, myriocin, on the histopathological and ultrastructural features of steatohepatitis, and the biochemical and molecular indices of hepatic steatosis, insulin resistance and ER stress. Myriocin reduced the severity of alcohol-related steatohepatitis including the abundance and sizes of lipid droplets and mitochondria, inflammation and architectural disruption of the ER. In addition, myriocin-mediated reductions in hepatic lipid and ceramide levels were associated with constitutive enhancement of insulin signalling through the insulin receptor and IRS-2, reduced hepatic oxidative stress and modulation of ER stress signalling mechanisms. In conclusion, ceramide accumulation in liver mediates tissue injury, insulin resistance and lipotoxicity in ALD. Reducing hepatic ceramide levels can help restore the structural and functional integrity of the liver in chronic ALD due to amelioration of insulin resistance and ER stress. However, additional measures are needed to protect the liver from alcohol-induced necroinflammatory responses vis-à-vis continued alcohol abuse.