Alcoholic hepatitis (AH) is the most severe form of alcoholic liver disease for which there are no effective therapies. Patients with AH show impaired hepatocyte proliferation, expansion of inefficient ductular cells and high lipopolysaccharide (LPS) levels. It is unknown whether LPS mediates ductular cell expansion. We performed transcriptome studies and identified keratin 23 (KRT23) as a new ductular cell marker. KRT23 expression correlated with mortality and LPS serum levels. LPS-TLR4 pathway role in ductular cell expansion was assessed in human and mouse progenitor cells, liver slices and liver injured TLR4 KO mice. In AH patients, ductular cell expansion correlated with portal hypertension and collagen expression. Functional studies in ductular cells showed that KRT23 regulates collagen expression. These results support a role for LPS-TLR4 pathway in promoting ductular reaction in AH. Maneuvers aimed at decreasing LPS serum levels in AH patients could have beneficial effects by preventing ductular reaction development.