Inflammation and immunoregulatory cytokines play a central role in alcohol-induced liver damage. We previously reported that acute alcohol treatment augments IL-10 and inhibits TNF-alpha production in monocytes. Heme oxygenase-1 (HO-1), a stress-inducible protein, also regulates IL-10 and TNF-alpha production. Here, we report that augmentation of LPS-induced IL-10 production by alcohol was prevented by inhibition of HO-1 activity. Acute ethanol increased LPS-induced enzyme activity and RNA levels of HO-1, and DNA binding of AP-1, a transcription factor essential in HO-1 regulation. LPS-induced phospho-p38 MAPK levels were augmented by ethanol treatment and the p38 inhibitor, SB203580, prevented both the ethanol-induced increase in IL-10 production and the inhibitory effect of ethanol on TNF-alpha production. Ethanol-induced down-regulation of TNF-alpha production was abrogated by inhibition of HO-1. We found that LPS-induced activation of NF-kappaB, a regulator of TNF-alpha, was inhibited by both ethanol treatment and HO-1 activation, but the ethanol-induced inhibition of NF-kappaB was HO-1 independent. In LPS-challenged mice in vivo, both acute alcohol administration and HO-1 activation augmented IL-10 and inhibited TNF-alpha serum levels. These results show that 1) acute alcohol augments HO-1 activation in monocytes, 2) HO-1 activation plays a role in alcohol-induced augmentation of IL-10 production likely via increased p38 MAPK activation, and 3) HO-1 activation is involved in attenuation of TNF-alpha production by alcohol independent of inhibition of NF-kappaB activation by alcohol. Thus, HO-1 activation is a key mediator of the anti-inflammatory effects of acute alcohol on monocytes.