Nitric oxide (NO) is now known to control both mitochondrial respiration and organelle biogenesis. Under conditions of ethanol‐dependent hepatic dysfunction, steatosis is increased, and this is associated with increased expression of inducible nitric oxide synthase (iNOS). We have previously shown that after chronic exposure to ethanol, the sensitivity of mitochondrial respiration to inhibition by NO is enhanced, and we have proposed that this contributes to ethanol‐dependent hypoxia. This study examines the role of iNOS in controlling the NO‐dependent modification of mitochondrial function. Mitochondria were isolated from the livers of both wild‐type (WT) and iNOS knockout (iNOS^−/−) mice that were fed an isocaloric ethanol‐containing diet for a period of 5 weeks. All animals that consumed ethanol showed some evidence of fatty liver; however, this was to a lesser extent in the iNOS^−/− mice compared to controls. At this early stage in ethanol‐dependent hepatic dysfunction, infiltration of inflammatory cells and the formation of nitrated proteins was also decreased in response to ethanol feeding in the iNOS^−/− animals. Mitochondria isolated from wild‐type ethanol‐fed mice showed a significant decrease in respiratory control ratio and an increased sensitivity to NO‐dependent inhibition of respiration relative to their pair‐fed controls. In contrast, liver mitochondria isolated from iNOS^−/− mice fed ethanol showed no change in the sensitivity to NO‐dependent inhibition of respiration. In conclusion, the hepatic response to chronic alcohol‐dependent cytotoxicity involves a change in mitochondrial function dependent on the induction of iNOS. (HEPATOLOGY 2004;40:565–573.)