Fatty liver disease (FLD), the most common chronic liver disease in the US, may be caused by alcohol or the metabolic syndrome. Alcohol is oxidized in the cytosol of hepatocytes by alcohol dehydrogenase (ADH), which generates NADH and increases cytosolic NADH/NAD⁺ ratio. The increased ratio may be important for development of FLD, but our ability to examine this question is hindered by methodological limitations. To address this, we used the genetically-encoded fluorescent sensor Peredox to obtain dynamic, real-time measurements of cytosolic NADH/NAD⁺ ratio in living hepatocytes. Peredox was expressed in dissociated rat hepatocytes and HepG2 cells by transfection, and in mouse liver slices by tail vein injection of adeno-associated virus (AAV)-encoded sensor. Under control conditions, hepatocytes and liver slices exhibit a relatively low (oxidized) cytosolic NADH/NAD⁺ ratio as reported by Peredox. The ratio responds rapidly and reversibly to substrates of lactate dehydrogenase (LDH) and sorbitol dehydrogenase (SDH). Ethanol causes a robust dose-dependent increase in cytosolic NADH/NAD⁺ ratio, and this increase is mitigated by the presence of NAD⁺-generating substrates of LDH or SDH. In contrast to hepatocytes and slices, HepG2 cells exhibit a relatively high (reduced) ratio, and show minimal responses to substrates of ADH and SDH. In slices, we show that comparable results are obtained with epifluorescence imaging and 2-photon fluorescence lifetime imaging (2p-FLIM). Live cell imaging with Peredox is a promising new approach to investigate cytosolic NADH/NAD⁺ ratio in hepatocytes. Imaging in liver slices is particularly attractive because it allows preservation of liver microanatomy and metabolic zonation of hepatocytes.