Alcoholic liver disease (ALD) is a common etiology of liver diseases, characterized by hepatic steatosis. We previously identified farnesoid X receptor (FXR) as a potential therapeutic target for ALD. Dihydroartemisinin (DHA) has been recently identified to possess potent pharmacological activities on liver diseases. This study was aimed to explore the impact of DHA on ALD and further elaborate the underlying mechanisms. Gain- or loss-of-function analyses of FXR were applied in both in vivo and in vitro studies. Results demonstrated that DHA rescued FXR expression and activity in alcoholic rat livers. DHA also reduced serodiagnostic markers of liver injury, including aspartate aminotransferase, alanine aminotransferase, alkaline phosphatase, and lactate dehydrogenase. DHA improved alcohol-induced liver histological lesions, expression of inflammation genes, and inflammatory cell infiltration. In addition, DHA not only attenuated hyperlipidemia but also reduced hepatic steatosis through regulating lipogenesis and lipolysis genes. In vitro experiments further consolidated the concept that DHA ameliorated ethanol-caused hepatocyte injury and steatosis. Noteworthily, DHA effects were reinforced by FXR agonist obeticholic acid or FXR expression plasmids but abrogated by FXR antagonist Z-guggulsterone or FXR siRNA. In summary, DHA significantly improved alcoholic liver injury by inhibiting hepatic steatosis, which was dependent on its activation of FXR in hepatocytes.