FAT10 expression is highly up-regulated by pro-inflammatory cytokines IFNγ and TNFα in all cell types and tissues. Increased FAT10 expression may induce increasing mitotic non-disjunction and chromosome instability, leading to tumorigenesis. In this review, we summarized others’ and our work on FAT10 expression in liver biopsy samples from patients with alcoholic hepatitis (AH). FAT10 is essential to maintain the function of liver cell protein quality control and Mallory–Denk body (MDB) formation. FAT10 overexpression in AH leads to balloon degeneration and MDB aggregation formation, all of which is prevented in fat10-/- mice. FAT10 causes the proteins’ accumulation, overexpression, and forming MDBs through modulating 26s proteasome’s proteases. The pathway that increases FAT10 expression includes TNFα/IFNγ and the interferon sequence response element (ISRE), followed by NFκB and STAT3, which were all up-regulated in AH. FAT10 was only reported in human and mouse specimens but plays critical role for the development of alcoholic hepatitis. Flavanone derivatives of milk thistle inhibit TNFα/IFNγ, NFκB, and STAT3, then inhibit the expression of FAT10. NFκB is the key nodal hub of the IFNα/TNFα-response genes. Studies on Silibinin and other milk thistle derivatives to treat AH confirms that overexpressed FAT10 is the major key molecule in these networks.