Acetaldehyde is so highly reactive that there may be many different biochemical pathways by which this occurs but consider the following two possibilities:
PROSTAGLANDINS
Prostaglandins are cell-to-cell regulatory substances produced to stimulate a variety of body processes in a delocalized (non-organ-specific) fashion. Two such intra-cellular molecules are PGF2-alpha and PGE2. PGF2-alpha stimulates cellular repair growth and PGE2 suppresses it.
Dietary deficiencies of essential fatty acids favor the production of PGF2-alpha over PGE2. Acetaldehyde can further exacerbate this imbalance by inhibiting the action of PGE2 but not PGF2-alpha. This means that cellular proliferation stimulated by localized emission of PGF2-alpha may not be adequately controlled by the corresponding suppressor prostaglandin PGE2.
Look closely at the two structures above and consider that they act by fitting into cellular receptors keyed to the difference in their atomic configurations. The crucial difference is in the upper left-hand corner of each molecule. Notice that the prostaglandin PGE2 responsible for shutting down cellular proliferation stimulated by PGF2-alpha has a C=O instead of the C-OH group that is present in PFG2-alpha. But again this C=O is similar to the configuration of the much smaller molecule acetaldehyde:
Consider what happens to a cell with acetaldehyde stuck in its receptor for PGE2. It would no longer be responsive to the cellular proliferation dampening effects of PGE2 because PGE2 can't dock there to exert its controlling influence.
Cellular reproduction out of control = cancer!
DNA REPAIR
Guanine is one of the four DNA bases fundamental to all lifeforms.
O6-methylguanine is a methylated (CH3) damaged form of guanine that is dangerous because it can cause DNA mutations which may be carcinogenic.
O6-methylguanine-DNA transferase is a suicide enzyme that can repair the damaged form of guanine by sacrificing itself in the process.
Acetaldehyde also finds the cysteine active site in this enzyme attractive (because of the exposed sulfhydryl) and irreversibly acetylates it. Since this is a "single-use" enzyme each acetaldehyde molecule that attacks an MGMT enzyme molecule in this manner makes it dysfunctional for DNA repair and significantly reduces the availability of active repair enzymes.
Dysfunctional DNA repair -> cancer!