Acute‐on‐chronic liver failure (ACLF) in cirrhosis is characterized by acute decompensation (AD), organ failure(s), and high short‐term mortality. Recently, we have proposed (systemic inflammation [SI] hypothesis) that ACLF is the expression of an acute exacerbation of the SI already present in decompensated cirrhosis. This study was aimed at testing this hypothesis and included 522 patients with decompensated cirrhosis (237 with ACLF) and 40 healthy subjects. SI was assessed by measuring 29 cytokines and the redox state of circulating albumin (HNA2), a marker of systemic oxidative stress. Systemic circulatory dysfunction (SCD) was estimated by plasma renin (PRC) and copeptin (PCC) concentrations. Measurements were performed at enrollment (baseline) in all patients and sequentially during hospitalization in 255. The main findings of this study were: (1) Patients with AD without ACLF showed very high baseline levels of inflammatory cytokines, HNA2, PRC, and PCC. Patients with ACLF showed significantly higher levels of these markers than those without ACLF; (2) different cytokine profiles were identified according to the type of ACLF precipitating event (active alcoholism/acute alcoholic hepatitis, bacterial infection, and others); (3) severity of SI and frequency and severity of ACLF at enrollment were strongly associated. The course of SI and the course of ACLF (improvement, no change, or worsening) during hospitalization and short‐term mortality were also strongly associated; and (4) the strength of association of ACLF with SI was higher than with SCD. Conclusion: These data support SI as the primary driver of ACLF in cirrhosis.