Epidemiological data indicate that 5.8% of cancer deaths world-wide are attributable to alcohol consumption. The risk of cancer is higher in tissues in closest contact on ingestion of alcohol, such as the oral cavity, pharynx and esophagus. The risk of these cancers is increased even in people who have only one alcoholic drink per day. However, since ethanol is not mutagenic and the carcinogenic metabolite of ethanol (acetaldehyde) is mostly produced in the liver, it is not clear why alcohol use preferentially exerts a local carcinogenic effect. It is well known that ethanol causes cell death at the concentrations present in alcoholic beverages; however, this effect has been overlooked probably because dead cells cannot give rise to cancer. Here I discuss that the cytotoxic effect of ethanol on the cells lining the oral cavity, pharynx and esophagus activates the division of the stem cells located in deeper layers of the mucosa to replace the dead cells. Every time stem cells divide, they become exposed to unavoidable errors associated with cell division (e.g., mutations arising during DNA replication and chromosomal alterations occurring during mitosis) and also become highly vulnerable to the genotoxic activity of endogenous and exogenous DNA-damaging agents (e.g., reactive oxygen species, acetaldehyde and tobacco carcinogens). Alcohol consumption probably increases the risk of developing cancer of the oral cavity, pharynx and esophagus by promoting the accumulation of cell divisions in the stem cells that maintain these tissues in homeostasis. Because the cytotoxic activity of ethanol is concentration-dependent, the risk of these cancers will not only increase with increasing amounts of ethanol, but also with increasing concentrations; an ounce of whisky is probably more carcinogenic when taken undiluted than when taken mixed with non-alcoholic beverages. The local cytotoxic effect of ethanol can also explain the known synergistic effect of alcohol and tobacco use on the risk of these cancers. Understanding the mechanisms of carcinogenicity of alcohol is important to reinforce the epidemiological evidence and to raise public awareness of the strong link between alcohol consumption and cancer.