Central nervous system dysfunctions (most notably microencephaly and mental retardation) are among the most significant effects of in utero exposure to ethanol. Ethanol causes alterations of both neuronal and glial cells. In particular, ethanol has been shown to inhibit proliferation of astroglial cells stimulated by certain, but not all mitogens. Here, we review evidence that acetylcholine, by activating the M(3) subtype of muscarinic receptors, increases DNA synthesis in rat and human astroglial cells and that this effect is inhibited by low ethanol concentrations (10-100mM). Of the several signal transduction pathways activated by these receptors in astrocytes or astrocytoma cells, ethanol appears to target activation of phospholipase D, leading to a decrease in phosphatidic acid, a decreased activation of the atypical protein kinase C zeta and decreased down-stream activation of p70S6 kinase and of nuclear factor-kappaB. Inhibition of this pathway by ethanol occurs at the same concentrations which effectively inhibit proliferation. Inhibition of astroglial cell proliferation by ethanol may contribute to the microencephaly present in most children diagnosed with the fetal alcohol syndrome.