Disease progression in alcoholic and non-alcoholic fatty liver disease shows sex specific differences and is influenced by mechanisms linked to oxidative stress. Acetaldehyde plays a critical pathogenic role but its effects are mitigated by the activity of aldehyde dehydrogenases. Aldehyde dehydrogenase 1b1 (Aldh1b1) is the aldehyde dehydrogenase isoform with the second highest affinity for acetaldehyde after Aldh2, and is highly expressed in the intestine and liver. We examined sex differences and the effect of Aldh1b1 depletion in a murine model of chronic alcohol-induced liver disease. Male and female wild-type and Aldh1b1-depleted mice received either ethanol (10-20% v/v) in drinking water or water alone for one year, and livers were examined histopathologically, histochemically and by immunohistochemistry. A significant increase in hepatic steatosis was observed in female mice after one year of ethanol consumption, and expression of ethanol-metabolising enzymes and up-regulation by ethanol was also sex-dependent. Ethanol-induced hyperproliferation of hepatocytes was observed in female and male wild-type mice, and Aldh1b1 depletion enhanced this effect in males. Further, one ethanol-treated, Aldh1b1-depleted male developed a steatohepatitic hepatocellular carcinoma. These sex-specific differences in susceptibility to hepatic steatosis and disease progression may be related to differences in expression of ethanol-metabolising enzymes, informing the clinically significant differences. Aldh1b1 plays a role in protection from ethanol-induced hepatocellular hyperproliferation and may protect from tumour development.