Alcohol has been found to cause short-term and long-term changes in a number of chemical systems, including those of the neurotransmitters GABA (gamma amino butyric acid), norepinephrine, serotonin, dopamine, adenosine, and choline.

Changes in these systems are felt to account for most of alcohol’s intoxicating effects.
The addictive potential of alcohol arises from two sources.

As the brain adapts to the substance’s widespread intoxicating effects, it adjusts its internal regulating systems to compensate.

So when you stop drinking, you experience some very unpleasant sensations, including anxiety, depression, shakiness, inability to sleep, and irritability. Drinking alcohol again brings the system back into equilibrium - for a while. It is reinforcing, then, to drink again, and the cycle continues. It was initially thought that this was the basis of addiction to alcohol - drinking to avoid the effects of withdrawal. But it goes further than that.

As we have learned, addicting drugs interact at some point within the ventral tegmentum or medial forebrain bundle, structures that make up the pleasure center of the brain. Several lines of evidence suggest that alcohol has an effect, probably indirectly, on the dopamine system in this part of the brain. Research indicates that there may be genetic differences in the sensitivity of the dopamine system to alcohol. Evidence also exists that alcohol affects the opiate system of the brain.
The suggestion is that there may be genetic differences in play here, too.

The research so far supports the long-standing observation that there appear to be different types of alcoholics. Some alcoholics seem to be as highly addicted to alcohol as heroin or crack addicts are to their drugs of choice. Others have less craving when dry, but lose control of the amount they drink.

Genetic differences in how the brain responds to the effects of alcohol might explain this difference.

Longer-term effects of alcohol fall into two categories: adaptive changes in the brain and direct toxicity. As we saw in the section on tolerance, the brain adapts to the presence of a mood-altering drug by trying to bring the system back into equilibrium. With alcohol, the overall effect is to crank up the brain’s alerting system so that a person can have more alcohol in his or her system without experiencing the depressant effects. Over the long term, this leads to a situation that we call chronic withdrawal, which means that the whole central nervous system remains hyperactive even if the person is drinking on a regular basis. It is even possible for someone with severe alcoholism to begin to have the symptoms of DTs (delirium tremens) with alcohol still in the system. Alcoholics commonly have generalized seizures while drinking heavily due to this hyperactivity and oversensitivity of the central nervous system.

Other symptoms of chronic withdrawal (or the long-term adaptation of the brain to the presence of alcohol) can be both physical and psychological. High blood pressure is a common physical manifestation, as are chronic sinus congestion and a low-grade tremor. People dependent on alcohol also complain of a variety of psychological symptoms including irritability, anxiety, panic attacks, depression, mood swings, and paranoia. These symptoms reflect the long-term adaptation of the brain to the presence of alcohol and eventually clear with abstinence. Most symptoms are markedly better within two weeks of detoxification, although some emotional instability may remain for several months.