PUFAs have been shown to modulate ALD by several mechanisms, including free radical generation from hepatic lipid peroxidation. However, how they modulate lipid peroxidation and generation of bioactive metabolites in ALD is poorly understood and it is still not clear which PUFAs (ω-3 or ω-6) are beneficial or detrimental in ALD. Thus, our objective was to study the effect of ω-3/ω-6 PUFAs on lipid peroxidation and ethanol mediated steatosis and inflammation. Using standard liquid diet (LDC), LDC with fish oil (rich in ω-3) and safflower oil (rich in ω-6), we studied the generation of bioactive metabolites, such as eicosanoids and free radicals generated via lipid peroxidation. In addition, we determined the effect of PUFAs on several inflammatory and fibrotic factors, e.g. gene as well as protein expression, using western blot and RT-PCR, respectively. We also investigated the effect of PUFA diets on novel targets, such as hepatic membrane transporters with potential role in liver inflammation. Our results suggest that ω-3 diet prevented while ω-6 based diets promoted the development of fatty liver and inflammation. ω-3 PUFA reduced AA-peroxidation by lowering hepatic AA concentration and expression of peroxidation enzymes, COX-2 and 5-LOX, resulting in lower generation of pro-inflammatory AA-derived PGs (Series-2), HETEs and free radicals, along with increase in anti-inflammatory EPA and DHA-derived PGs (Series-3). ω-3 diet might also reduce liver inflammation by preventing activation of NF-кB and induction of TNF-α. Rats fed with ω-3 diet showed high protein expression of efflux transporters, MRP-2 and ABCA1, indicating elimination of peroxidation metabolites and triglycerides from the liver and decreased inflammation. In contrast, ω-6 diets led to increase in AA-peroxidation and generation of AA-derived pro-inflammatory metabolites. ω-6 based diets also promoted fatty liver and inflammation by activating NF-кB, inducing TNF-α and downregulation of efflux transporters, MRP-2 and ABCA1. This study not only provides new insights into the effects and possible mechanisms by which ω-3 and ω-6 PUFAs may alter hepatic steatosis and inflammation, but also put forward new targets of research, such as hepatic membrane transporters in relation to liver pathology in ALD.