There is strong empirical support for the association between anxiety sensitivity and alcohol use, although this has not been investigated in psychiatric inpatients. Further, little is known about mechanisms mediating these associations, such as emotion regulation difficulties. Self-report questionnaires measuring anxiety sensitivity, difficulties regulating emotion, and alcohol use were administered to 119 adults admitted to an acute-care inpatient psychiatric hospital. The current study examined emotion regulation difficulties as a mediator in the anxiety sensitivity–alcohol use severity association. Exploratory analyses separately examined effects with regard to alcohol consumption in terms of number of days drinking and drinking to intoxication as well as alcohol problems in terms of number of days experiencing problems and degree of bother resulting from alcohol problems. Emotion regulation difficulties significantly mediated the associations between anxiety sensitivity and alcohol use severity, days drinking to intoxication, days experiencing alcohol-related problems, and degree of bother caused by alcohol problems. Indirect associations were medium sized. There were no direct associations of anxiety sensitivity with any outcome, controlling for emotion regulation difficulties. Anxiety sensitivity may be indirectly (via emotion regulation difficulties) related to alcohol consumption and alcohol problems with no significant direct associations after accounting for emotion regulation difficulties.