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Alcohol-induced psychotic disorder (AIPD) is a serious psychiatric complication associated with prolonged and excessive alcohol consumption, characterized by hallucinations, delusions, confusion, agitation, anxiety, and impaired cognitive functioning. This systematic review evaluates alcohol-induced psychosis based on patient clinical profiles, demographic characteristics, associated medical conditions, psychiatric comorbidities, and treatment outcomes using hospital-based clinical data. The study collected patient reports from multiple hospitals and analyzed variables including age, sex, marital status, educational level, employment, income, previous medical history, and psychiatric disorders. Results indicate that AIPD is more prevalent among young adults aged 15–30 years, predominantly males, individuals with low educational status, low socioeconomic background, and chronic alcohol dependence. Medical comorbidities such as hypertension, type-2 diabetes mellitus, epilepsy, head injury, alcohol-related liver disease, and pancreatitis were frequently observed among affected individuals. Psychiatric comorbidities including affective disorders, anxiety disorders, personality disorders, and substance use disorders significantly increased the complexity of clinical presentation. Mortality and suicidal tendencies were higher among patients with alcohol-induced psychosis, with males showing greater vulnerability than females. Neurochemical alterations involving dopamine, gamma-aminobutyric acid (GABA), glutamate, and serotonin play a major role in the pathophysiology of the disorder. Early diagnosis, integrated psychiatric management, alcohol withdrawal monitoring, and preventive public health strategies are essential to reduce morbidity and mortality associated with alcohol-induced psychotic disorder.