Megaloblastic anemia due to folate deficiency, the result of dietary lack and a weak antifolate action of ethanol, is the most common cause of a low hematocrit in hospitalized alcoholics. Alcoholism in the absence of significant folate depletion is more commonly responsible for macrocytosis, however. Neutrophil hypersegmentation, which typically persists or worsens during the first 1 to 2 weeks of folic acid therapy, is a useful sign of folate depletion. Serum folate concentrations, however, are often misleading. During conversion of the megaloblastic marrow following hospitalization, giant bands and metamyelocytes often persist after erythroid cells become normal. Reversible ineffective erythropoiesis due to sideroblastic anemia, often but not invariably in association with folate deficiency, is also common. In about half the patients, siderocytes in the peripheral blood smear, which may transiently increase in number during recovery, provide a useful diagnostic clue. Despite the presence of hypochromic microcytes, the erythrocyte mean corpuscular volume is typically normal or elevated. The chronic administration of alcohol along with a marginal diet has produced ringed sideroblasts in human volunteers. Inhibition of heme synthesis by ethanol and an unidentified nutritional factor probably play major roles in pathogenesis. Current evidence does not clearly implicate vitamin B6 depletion in sideroblastic anemia in alcoholics.