Loss of hepatocyte identity is associated with impaired liver function in alcohol-related hepatitis (AH). In this context, hepatocyte dedifferentiation gives rise to cells with a hepatobiliary (HB) phenotype expressing biliary and hepatocyte markers and showing immature features. However, the mechanisms and impact of hepatocyte dedifferentiation in liver disease are poorly understood. HB cells and ductular reaction (DR) cells were quantified and microdissected from liver biopsies from patients with alcohol-related liver disease (ArLD). Hepatocyte-specific overexpression or deletion of C-X-C motif chemokine receptor 4 (CXCR4), and CXCR4 pharmacological inhibition were assessed in mouse liver injury. Patient-derived and mouse organoids were generated to assess plasticity. Here, we show that HB and DR cells are increased in patients with decompensated cirrhosis and AH, but only HB cells correlate with poor liver function and patients’ outcome. Transcriptomic profiling of HB cells revealed the expression of biliary-specific genes and a mild reduction of hepatocyte metabolism. Functional analysis identified pathways involved in hepatocyte reprogramming, inflammation, stemness, and cancer gene programs. The CXCR4 pathway was highly enriched in HB cells and correlated with disease severity and hepatocyte dedifferentiation. In vitro, CXCR4 was associated with a biliary phenotype and loss of hepatocyte features. Liver overexpression of CXCR4 in chronic liver injury decreased the hepatocyte-specific gene expression profile and promoted liver injury. CXCR4 deletion or its pharmacological inhibition ameliorated hepatocyte dedifferentiation and reduced DR and fibrosis progression. This study shows the association of hepatocyte dedifferentiation with disease progression and poor outcome in AH. Moreover, the transcriptomic profiling of HB cells revealed CXCR4 as a new driver of hepatocyte-to-biliary reprogramming and as a potential therapeutic target to halt hepatocyte dedifferentiation in AH. Here, we show that hepatocyte dedifferentiation is associated with disease severity and a reduced synthetic capacity of the liver. Moreover, we identify the CXCR4 pathway as a driver of hepatocyte dedifferentiation and as a therapeutic target in alcohol-related hepatitis. Display omitted •Hepatobiliary cells are associated with poor outcomes in patients with ArLD.•Hepatobiliary cells express pathways related to inflammation and stemness.•Cxcr4 drives hepatocyte dedifferentiation in chronic liver injury.•Cxcr4 overexpression in hepatocytes promotes hepatocyte dedifferentiation and injury progression.•Genetic deletion or pharmacological inhibition of Cxcr4 reverts hepatocyte dedifferentiation.