Severe alcoholic hepatitis (SAH) has high 90-day mortality. Prednisolone therapy has shown modest survival benefits over placebo at 28 but not 90 days. Fecal microbial transplantation (FMT) has shown promise in these patients. We compared the efficacy and safety of the two therapies in SAH patients. Steroid eligible SAH patients were randomized in an open-label study to prednisolone (n = 60) 40 mg/day for 28 days (assessed at day-7 for continuation) or healthy donor FMT (n = 60) through naso-duodenal tube, daily for seven days. Primary outcome of study was day-90 survival. Patients in prednisolone and FMT arms were comparable at baseline (discriminant function score 65 +/- 16.2 and 68 +/- 14, MELD score 17.1 and 16.5, respectively). Of 120 patients, 112 [prednisolone-57; FMT-55] completed trial. As per intention-to-treat analysis, 90-day survival was achieved by 56.6% (34/60) patients in prednisolone and 75% (45/60) in FMT group (p = 0.044, FMT HR = 0.528, 95%CI 0.279-0.998). Secondary outcome of 28-day survival [78.33% (47/60) and 88.33% (53/60) (p = 0.243, FMT HR = 0.535, 95%CI 0.213-1.34)] with comparable severity scores over time between both arms. Infections accounted for 11 (19.3%) and 2 (3.6%) deaths in prednisolone and FMT groups, respectively (p = 0.01). Path-tracing showed a slow establishment of microbiota and alpha diversity (Shannon index) improvement by day-28 (p = 0.029). FMT resulted in 23 new taxa by day-28, reduction from baseline in pathogenic taxa [Campylobacter (19-fold, p = 0.035), anaerobes (Parcubacteria, Weisella and Leuconostocaceae)], and increase of Alphaproteobacteria [similar to sevenfold, p = 0.047] and Thaumarcheota (known ammonia oxidizer, p = 0.06). Lachnospiraceae (p = 0.008), Prevotella and Viellonella communities in gut favored survival (p < 0.05). In severe alcoholic hepatitis, FMT is safe and improves 90-day survival and reduces infections by favorably modulating microbial communities. It can be a useful alternative to prednisolone therapy.