This chapter reviews the role of acetaldehyde in relation to the established effects of prenatal alcohol exposure. Alcohol ingested by the mother readily reaches the fetus, while null or low amounts of maternal acetaldehyde enter the fetal compartment. However, alcohol is oxidized to acetaldehyde in the fetal brain and this locally produced acetaldehyde could explain many of the effects of alcohol exposure, such as retarded development and neural damage. Acetaldehyde appears to also be responsible for the behavioral effects of alcohol, including motor stimulation, sedation, aversive effects, and appetitive reinforcement in early development. The appetitive effects of central acetaldehyde may be the positive reinforcer involved in the prenatal appetitive learning occurring during fetal alcohol exposure that leads to increased acceptance and intake of alcohol after birth.