Alcohol has neurotoxic effects that frequently result in significant sensorimotor and cognitive deficits. These cognitive deficits may have profound implications for the behaviour and treatment of patients who abuse alcohol. In particular, the deficits in executive cognition that are typical of alcoholic dementia result in difficulties with planning, insight and impulse control. These deficits are frequently misinterpreted as alcoholic denial and are therefore assumed to have a psychodynamic basis. This paper reviews the neurological substrates for insight and self-monitoring and discusses a possible pathophysiology for a subgroup of alcoholic patients who exhibit alcoholic denial. Implications of this model for the evaluation and treatment of alcoholic patients are discussed.