Innate immune mechanisms leading to liver injury subsequent to chronic alcohol ingestion are poorly understood. Natural killer T (NKT) cells, enriched in the liver and comprised of at least two distinct subsets, type I and II, recognize different lipid antigens presented by CD1d molecules. We have investigated whether differential activation of NKT cell subsets orchestrates inflammatory events leading to alcoholic liver disease (ALD). We found that after chronic plus binge feeding of Lieber‐DeCarli liquid diet in male C57BL/6 mice, type I, but not type II, NKT cells are activated, leading to recruitment of inflammatory Gr‐1^highCD11b⁺ cells into the liver. A central finding is that liver injury after alcohol feeding is dependent upon type I NKT cells. Thus, liver injury is significantly inhibited in Jα18^−/− mice deficient in type I NKT cells as well as after their inactivation by sulfatide‐mediated activation of type II NKT cells. Furthermore, we have identified a novel pathway involving all‐trans retinoic acid (ATRA) and its receptor (RARγ) signaling that inhibits type I NKT cells and, consequently, ALD. A semiquantitative polymerase chain reaction analysis of hepatic gene expression of some of the key proinflammatory molecules shared in human disease indicated that their up‐regulation in ALD is dependent upon type I NKT cells. Conclusions: Type I, but not type II, NKT cells become activated after alcohol feeding. Type I NKT cell‐induced inflammation and neutrophil recruitment results in liver tissue damage whereas type II NKT cells protect from injury in ALD. Inhibition of type I NKT cells by retinoids or by sulfatide prevents ALD. Given that the CD1d pathway is highly conserved between mice and humans, NKT cell subsets might be targeted for potential therapeutic intervention in ALD. (Hepatology 2015;61:1357–1369)