Alcohol‐related liver disease (ALD) is a worldwide health issue that claims two million lives in the U.S. each year. Increased megamitochondria and impaired mitophagy in hepatocytes have been linked to the pathogenesis of ALD. However, the exact mechanisms by which alcohol increases megamitochondria and impairs mitophagy and how this contributes to the pathogenesis of ALD remain largely unknown. Here we showed that dynamin‐related protein 1 (Drp1), the key mitochondrial fission protein, decreased at both mRNA and protein levels in human alcoholic hepatitis (AH) and an experimental ALD mouse model. Electron microscopy studies revealed increased number of megamitochondria in human AH and experimental mouse ALD. Liver‐specific Drp1 knockout mice had increased megamitochondria and decreased mitophagy with increased liver injury, inflammation and pre‐fibrotic conditions, which were further exacerbated by chronic plus binge alcohol feeding. RNAseq and q‐PCR analysis revealed increased gene expression in the cGAS‐STING‐Interferon signaling pathway in liver‐specific Drp1 KO mice regardless of alcohol feeding. Unbiased metabolomics studies showed accumulation of acylcarnitine fatty acids and decreased both oxidized and reduced glutathione metabolites in ethanol fed mice regardless of Drp1 genotypes. However, the levels of itaconate, a metabolite associated with inflammation and TCA cycle increased in Drp1 KO mice regardless of ethanol feeding. Further mechanistic studies revealed that the transcription factor EB (TFEB) bound to the promoter region of Drp1, and overexpression or knockout of TFEB increased or decreased Drp1 expression in hepatocytes, respectively. Ethanol fed liver‐specific Drp1 KO mice had increased cytosolic mtDNA release, decreased mitophagy and increased mitochondrial dysfunction, which may account for the increased activation of cGAS‐STING‐Interferon signaling pathways and liver injury. In conclusion, alcohol consumption decreases hepatic Drp1 resulting in increased megamitochondria and impaired mitophagy that promotes alcoholic hepatitis by mitochondria‐mediated inflammation and cell injury.