Background Alcoholic liver disease (ALD) progresses from steatosis to inflammation, fibrosis, and cirrhosis. Although ALD has been associated with insulin resistance, it is unclear whether insulin resistance coincides with the development of steatosis. Methods We studied the temporal relationship of steatosis and glucose homeostasis in mice fed a Lieber-DeCarli liquid control or ethanol (EtOH) diet for 2, 4, or 8weeks. We studied the effects of alcohol consumption on energy balance, body composition, and hepatic lipids. Glucose tolerance test was performed, and insulin sensitivity was evaluated with hyperinsulinemic-euglycemic clamp. Results EtOH-fed mice developed hepatic steatosis over time as compared with control-fed mice despite similar energy intake and expenditure, and gain in body weight and fat. EtOH-fed mice developed glucose intolerance as early as 2weeks, while insulin resistance developed at 4weeks. A hyperinsulinemic clamp study at 8weeks revealed both hepatic and peripheral insulin resistance in EtOH-fed mice. Insulin resistance was associated with hepatic steatosis, increased ceramide levels, and Perilipin 2 expression. Conclusions Chronic EtOH consumption leads to the development of hepatic steatosis, impaired glucose tolerance, and insulin resistance. These changes are independent of energy intake or expenditure, weight, whole body fat content, and inflammation. A better understanding of the processes linking EtOH-induced steatosis and abnormal glucose homeostasis may lead to novel therapies targeting the progression of ALD.