Alcohol-induced liver disease (ALD) has become one of the major global health problems, and the aim of this study was to investigate the characterization of the structure as well as the hepatoprotective effect and mechanism of oyster peptide (OP, MW < 3500 Da) on ALD in a mouse model. The results demonstrate that ethanol administration could increase the activities of aspartate aminotransferase (AST), alanine transaminase (ALT), γ-Glutamyl transferase (GGT), reactive oxygen species (ROS), malondialdehyde (MDA), and triglycerides (TG), as well as increase the interleukin-1β (IL-1β), interleukin-6 (IL-6), and tumor necrosis factor (TNF-α) levels (p < 0.01), and reduce the activity of superoxide dismutase (SOD) and the concentration of glutathione (GSH). Those changes were significantly reversed by the application of different doses of OP. Furthermore, the mRNA expressions of nuclear factor elythroid 2-related factor 2 (Nrf2), heme oxygenase-1 (HO-1), and quinone oxidoreductase1 (NQO1) were significantly up-regulated in OP groups, and the mRNA expressions of nuclear factor kappa-light chain enhancer of B cells (NF-κB), TNF-α, and IL-6 were markedly reduced in OP groups compared to that of the model group. Thus, OP had a significant protective effect on ALD through the enhancement of the in vivo antioxidant ability and the inhibition of the inflammatory response as possible mechanisms of action, which therefore suggests that OP might be useful as a natural source to protect the liver from alcohol damage.