Substance-dependent individuals often lack the ability to adjust decisions flexibly in response to the changes in reward contingencies. Prediction errors (PEs) are thought to mediate flexible decision-making by updating the reward values associated with available actions. In this study, we explored whether the neurobiological correlates of PEs are altered in alcohol dependence. Behavioral, and functional magnetic resonance imaging (fMRI) data were simultaneously acquired from 34 abstinent alcohol-dependent patients (ADP) and 26 healthy controls (HC) during a probabilistic reward-guided decision-making task with dynamically changing reinforcement contingencies. A hierarchical Bayesian inference method was used to fit and compare learning models with different assumptions about the amount of task-related information subjects may have inferred during the experiment. Here, we observed that the best- fitting model was a modified Rescorla-Wagner type model, the “double-update” model, which assumes that subjects infer the knowledge that reward contingencies are anti-correlated, and integrate both actual and hypothetical outcomes into their decisions. Moreover, comparison of the best-fitting model's parameters showed that ADP were less sensitive to punishments compared to HC. Hence, decisions of ADP after punishments were loosely coupled with the expected reward values assigned to them. A correlation analysis between the model-generated PEs and the fMRI data revealed a reduced association between these PEs and the BOLD activity in the dorsolateral prefrontal cortex (DLPFC) of ADP. A hemispheric asymmetry was observed in the DLPFC when positive and negative PE signals were analyzed separately. The right DLPFC activity in ADP showed a reduced correlation with positive PEs. On the other hand, ADP, particularly the patients with high dependence severity, recruited the left DLPFC to a lesser extent than HC for processing negative PE signals. These results suggest that the DLPFC, which has been linked to adaptive control of action selection, may play an important role in cognitive inflexibility observed in alcohol dependence when reinforcement contingencies change. Particularly, the left DLPFC may contribute to this impaired behavioral adaptation, possibly by impeding the extinction of the actions that no longer lead to a reward.