In the present study, the protective effects of 10% ethanol extract of Capsosiphon fulvescens (CFE10) against alcoholic liver damage were investigated in vitro using CYP2E1-overexpressing hepatocytes (HepG2/2E1). To determine whether CFE10 attenuated ethanol-induced cell death, we compared the viability of HepG2/2E1 cells treated with 250 mM ethanol in the presence or absence of CFE10. Cell viability significantly increased after treatment with CFE10 and ethanol compared with that of cells treated with only ethanol. Additionally, CFE10 inhibited ethanol-induced ROS formation and lipid peroxidation. We also found that CFE10 attenuated the mRNA expression of CYP2E1, as well as decreased ethanol-induced lipid droplets, through stimulation of the AMPK pathway. Based on these results, the protective effect of CFE10 extract from C. fulvescens against liver damage and fatty liver induced by ethanol may occur via the alleviation of oxidative stress.