Incomplete neural tube fusion (iNTF), induced by alcohol, in midline floor and roof plates was found in our recent study. In this study, serotonin (5-HT) neurons, known to be born entirely in the midline raphe at brainstem, were examined during their development with fetal alcohol exposure. Weight-matched C57BL mice pregnant dams were divided into three groups on E8: one received ethanol via a chocolate Sustacal liquid diet providing 20% ethanol-derived calories as the sole source of nutrients (ALC); the second received an isocaloric Sustacal liquid diet and was pair-fed to individual dams in the ethanol-fed group (PF); the third was fed ad lib rat chow (Chow). Fetal brains were obtained on E15 and were processed for immunostaining of 5-HT and its trophic factor, S100 beta. The ascending 5-HT neurons, in normal development, appear bilaterally near midline on E12, and by E15, as seen in chow and PF groups, migrate from the midline germinal zone laterally and dorsally to their final position with rich fibers. In contrast, in the E15 ALC group, many 5-HT-im neurons were found remaining in the midline germinal region or had migrated, but with under-differentiated, sparse fibers. There were 20--30% fewer 5-HT-im neurons in ALC as compared to PF and Chow. In addition, the number of S100 beta cells was less in ALC as compared with PF and Chow groups. No difference was found between PF and Chow in number of 5-HT-im or S100 beta-im cells. The 5-HT neurons found compromised in migration and differentiation may, in part, stem from failure of access to floor plate or midline tissue induction and the insufficient support by S100 beta. As 5-HT neurons have been implicated for signaling brain maturation, fewer 5-HT neurons may have lasting effects on the development of brain or, if persistent in the adult, profoundly affect adult brain function.