Most alcohol (ethanol) is metabolized in the liver by the enzyme alcohol dehydrogenase. This breaks the alcohol down into acetaldehyde in an oxidation reaction:
CH3CH2OH + NAD+ ---> CH3CHO + NADH + H+
(ethanol) (acetaldehyde)
Acetaldehyde is a toxic compound which can harm the liver so it is then metabolized to acetate by the enzyme acetate dehydrogenase. The acetate is then subsequently metabolized to carbon dioxide and water.
Nevertheless, alcohol can cause damage. Extended, excessive alcohol consumption causes cirrhosisof the liver, a condition that can be slowly fatal.
See:
http://www.elmhurst.edu/~chm/vchembook/642alcoholmet.html
http:/www.chemcases.com/alcohol