Acute-on-chronic liver failure (ACLF) is a complex syndrome that develops in patients with cirrhosis and is characterized by acute decompensation, organ failure(s) and high short-term mortality. ACLF frequently occurs in close temporal relationship to a precipitating event, such as acute alcoholic, drug-induced or viral hepatitis or bacterial infection and, in cases without precipitating events, probably related to intestinal translocation of bacterial products. Dysbalanced immune function is central to its pathogenesis and outcome with an initial excessive systemic inflammatory response that drives organ failure and mortality. This hyperinflammatory state ultimately impairs the host defensive mechanisms of immune cells, rendering ACLF patients immunocompromised and more vulnerable to secondary infections, and therefore to higher organ dysfunction and mortality. In this review, we describe the prevailing characteristics of the hyperinflammatory state in patients with acutely decompensated cirrhosis developing ACLF, with special emphasis on cells of the innate immune system (i.e., monocytes and neutrophils), their triggers (pathogen- and damage-associated molecular patterns [PAMPs and DAMPs]), their effector molecules (cytokines, chemokines, growth factors and bioactive lipid mediators) and the consequences on tissue immunopathology. In addition, this review includes a chapter discussing new emerging therapies based on the modulation of leukocyte function by the administration of pleiotropic proteins such as albumin, Toll-like receptor 4 antagonists, interleukin-22 or stem cell therapy. Finally, the importance of finding an appropriate intervention that reduces inflammation without inducing immunosuppression is highlighted as one of the main therapeutic challenges in cirrhosis.