Ibudilast, a neuroimmune modulator which selectively inhibits phosphodiesterases (PDE)-3, -4, -10, and -11, and macrophage migration inhibitory factor (MIF), shows promise as a novel pharmacotherapy for alcohol use disorder (AUD). However, the mechanisms of action underlying ibudilast's effects on the human brain remain largely unknown. Thus, the current study examined the efficacy of ibudilast to improve negative mood, reduce heavy drinking, and attenuate neural reward signals in individuals with AUD. Fifty-two nontreatment-seeking individuals with AUD were randomized to receive ibudilast (n = 24) or placebo (n = 28). Participants completed a 2-week daily diary study during which they filled out daily reports of their past day drinking, mood, and craving. Participants completed an functional magnetic resonance imaging (fMRI) alcohol cue-reactivity paradigm half-way through the study. Ibudilast did not have a significant effect on negative mood (β = -0.34, p = 0.62). However, ibudilast, relative to placebo, reduced the odds of heavy drinking across time by 45% (OR = 0.55, (95% CI: 0.30, 0.98)). Ibudilast also attenuated alcohol cue-elicited activation in the ventral striatum (VS) compared to placebo (F(1,44) = 7.36, p = 0.01). Alcohol cue-elicited activation in the VS predicted subsequent drinking in the ibudilast group (F(1,44) = 6.39, p = 0.02), such that individuals who had attenuated ventral striatal activation and took ibudilast had the fewest number of drinks per drinking day in the week following the scan. These findings extend preclinical and human laboratory studies of the utility of ibudilast to treat AUD and suggest a biobehavioral mechanism through which ibudilast acts, namely, by reducing the rewarding response to alcohol cues in the brain leading to a reduction in heavy drinking.