Chronic alcohol use increases risk of alcohol withdrawal symptoms (AW) and disrupts stress biology and resilient coping, thereby promoting excessive alcohol intake. Chronic alcohol intake and multiple alcohol detoxifications are known to impair brain medial prefrontal cortex (mPFC) and striatal functioning, regions involved in regulating stress, craving and alcohol intake. In two related studies, we examined whether AW predicts this functional brain pathology and whether Prazosin versus Placebo treatment may reverse these effects. In Study 1, patients with Alcohol Use Disorder (AUD) (N = 45) with varying AW levels at treatment entry were assessed to examine AW effects on corticostriatal responses to stress, alcohol cue and neutral visual images with functional magnetic resonance imaging (fMRI). In Study 2, 23 AUD patients entering a 12-week randomised controlled trial (RCT) of Prazosin, an alpha1 adrenergic antagonist that decreased withdrawal-related alcohol intake in laboratory animals, participated in two fMRI sessions at pretreatment and also at week 9-10 of chronic treatment (Placebo: N = 13; Prazosin: N=10) to assess Prazosin treatment effects on alcohol-related cortico-striatal dysfunction. Study 1 results indicated that higher AW predicted greater disruption in brain mPFC and striatal response to stress and alcohol cues (p < 0.001, family-wise error [FWE] correction) and also subsequently greater heavy drinking days (HDD) in early treatment (p < 0.01). In Study 2, Prazosin versus Placebo treatment reversed mPFC-striatal dysfunction (p < 0.001, FWE), which in turn predicted fewer drinking days (p < 0.01) during the 12-week treatment period. These results indicate that AW is a significant predictor of alcohol-related prefrontal-striatal dysfunction, and Prazosin treatment reversed these effects that in turn contributed to improved alcohol treatment outcomes.