The effect of moderate alcohol consumption on NAFLD histology is disputed. Assessment of alcohol consumption is commonly performed with interview or questionnaires. Phosphatidylethanol (PEth) in blood is a highly sensitive and specific alcohol biomarker, which only forms in the presence of ethanol. PEth has hitherto not been evaluated in longitudinal NAFLD studies. This study aimed to examine the impact of moderate alcohol consumption on histologic progression and evaluate the utility of PEth in NAFLD. NAFLD patients with serial biopsies were reviewed for inclusion in the study. At baseline, all patients reported alcohol consumption <140 g/week. Anthropometric and biochemical measurements were performed at baseline and follow-up. Alcohol consumption was assessed thoroughly at follow-up with clinical interview, the Alcohol Use Disorder Identification Test-Consumption (AUDIT-C) questionnaire, and analysis of PEth in whole blood. Eighty-two patients were included. Mean follow-up time was 17.2 years (SD±6.0). Patients with significant fibrosis progression (defined as progression of ≥2 stages or development of cirrhosis-related complications) reported higher alcohol consumption and had significantly higher PEth. Consumption >66–96 g/week (but <140 g) (i.e. moderate alcohol consumption) was associated with increased risk of significant fibrosis progression compared with no or low consumption. PEth ≥48 ng/mL and binge drinking showed the highest risk for significant fibrosis progression (aOR: 5.9; 95% CI: 1.6–21.4) and aOR: 5.1; 95% CI: 1.4–18.1, respectively). NAFLD patients consuming moderate amounts of alcohol are at increased risk for significant fibrosis progression and development of cirrhosis-related complications. PEth is a potential biomarker to assess harmful alcohol consumption in NAFLD. Patients reporting moderate consumption or exhibiting PEth ≥48 ng/mL should be advised to reduce alcohol consumption.