Alcohol consumption is one of the major causes of hepatic steatosis, fibrosis, cirrhosis, and superimposed hepatocellular carcinoma. Ethanol metabolism alters the NAD(+)/NADH ratio, thereby suppressing the activity of sirtuin family proteins, which may affect lipid metabolism in liver cells. However, it is not clear how long-term ingestion of ethanol eventually causes lipid accumulation in liver. Here, we demonstrate that chronic ethanol ingestion activates peroxisome proliferator-activated receptor γ (PPARγ) and its target gene, monoacylglycerol O-acyltransferase 1 (MGAT1). During ethanol metabolism, a low NAD(+)/NADH ratio repressed NAD-dependent deacetylase sirtuin 1 (SIRT1) activity, concomitantly resulting in increased acetylated PPARγ with high transcriptional activity. Accordingly, SIRT1 transgenic mice exhibited a low level of acetylated PPARγ and were protected from hepatic steatosis driven by alcohol or PPARγ2 overexpression, suggesting that ethanol metabolism causes lipid accumulation through activation of PPARγ through acetylation. Among the genes induced by PPARγ upon alcohol consumption, MGAT1 has been shown to be involved in triglyceride synthesis. Thus, we tested the effect of MGAT1 knockdown in mice following ethanol consumption, and found a significant reduction in alcohol-induced hepatic lipid accumulation. These results suggest that MGAT1 may afford a promising approach to the treatment of fatty liver disease.