Severe alcoholic hepatitis (SAH) is associated with iron accumulation in hepatocytes/macrophages. This possibly correlates with inflammation and stress but the exact mechanism still remains obscure. To understand the role of iron and the mechanisms of systemic iron-overload, a transcriptomic study of liver and Peripheral Blood -Mononuclear-Cells (PBMCs) was undertaken in SAH patients, with and without hepatic iron-overload. Our results show that iron-overload in hepatocytes/macrophages is due to an increased expression of iron-loading receptors and CD163 signaling cascade. Increase in labile iron pool induces expression of iron-loading, oxidative-stress and inflammatory genes along with expression of CD163 and ADAM17. Increased liver iron correlated with circulatory iron, TNF-α, macrophage activation (sCD163) and peroxide-stress in CD163+macrophages in patients who were iron-overloaded and died. Circulatory TNF-α and sCD163 levels were associated with poor outcome. Temporal iron/Fenton stress induced in healthy monocyte-derived-macrophage (MDM)/Tohoku-Hospital-Pediatrics-1(THP1) cells showed higher expression of iron-regulatory, inflammatory and oxidative-stress genes. These genes could be suppressed by iron-chelation. These results suggest that iron mediates inflammation through ADAM17 induction, resulting in macrophage activation and increased shedding of TNF-α and sCD163. These events could be inhibited with iron chelation or with ADAM17-blockade, postulating a therapeutic strategy for SAH patients with iron overload.