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Ethanol acts as a teratogen causing brain, craniofacial, and limb abnormalities in those suffering from fetal alcohol syndrome. Normal embryonic development of the vertebrate nervous system and limbs has recently been shown to be governed by retinoic acid, the active form of vitamin A. Retinol dehydrogenase is an enzyme needed to convert vitamin A (retinol) to retinoic acid, a molecule that specifies embryonic pattern formation by controlling gene expression. Ethanol acts as a competitive inhibitor of the retinol dehydrogenase activity attributed to mammalian alcohol dehydrogenase (ADH), an enzyme that uses both retinol and ethanol as substrates. An hypothesis is presented in which many of the abnormalities observed in fetal alcohol syndrome may be caused by high levels of ethanol acting as a competitive inhibitor of ADH-catalyzed retinol oxidation in the embryo or fetus. This would presumably result in a reduction of retinoic acid synthesis in embryonic tissues such as the nervous system and limbs that require critical levels of this molecule to specify spatial patterns.