Alcohol-associated liver disease is the primary cause of liver-related mortality worldwide and one of the most common indications for liver transplantation. Alcoholic hepatitis represents the most acute and severe manifestation of alcohol-associated liver disease and is characterized by a rapid onset of jaundice with progressive inflammatory liver injury, worsening of portal hypertension, and an increased risk for multiorgan failure in patients with excessive alcohol consumption. Severe alcoholic hepatitis is associated with a poor prognosis and high short-term mortality. During the COVID-19 pandemic, rates of alcohol-associated hepatitis have increased significantly, underscoring that it is a serious and growing health problem. However, adequate management of alcohol-associated hepatitis and its complications in everyday clinical practice remains a major challenge. Currently, pharmacotherapy is limited to corticosteroids, although these have only a moderate effect on reducing short-term mortality. In recent years, translational studies deciphering key mechanisms of disease development and progression have led to important advances in the understanding of the pathogenesis of alcoholic hepatitis. Emerging pathophysiology-based therapeutic approaches include anti-inflammatory agents, modifications of the gut-liver axis and intestinal dysbiosis, epigenetic modulation, antioxidants, and drugs targeting liver regeneration. Concurrently, evidence is increasing that early liver transplantation is a safe treatment option with important survival benefits in selected patients with severe alcoholic hepatitis not responding to medical treatment. This narrative review describes current pathophysiology and management concepts of alcoholic hepatitis, provides an update on emerging treatment options, and focuses on the need for holistic and patient-centred treatment approaches to improve prognosis.