Cholesterol homeostasis plays an important role in the developing brain. Impaired cholesterol homeostasis has a deleterious effect on fetus. It is now recognized that the symptoms of several diseases due to disrupted cholesterol homeostasis are similar to those caused by ethanol, suggesting that ethanol may alter cholesterol homeostasis and therefore cause harmful effects. This study investigated if ethanol exerts its neurotoxicity through alteration in cholesterol homeostasis. The effect of ethanol on cholesterol synthesis in astrocytes was studied through thin layer chromatography analysis. The level of ABCA1 transported to the membrane was investigated and mRNA levels of ABCA1 and ApoE in astrocytes treated with ethanol were quantified. No effect on cholesterol synthesis was observed at all conditions examined in this study while both ABCA1 translocated to the plasma membrane and ABCA1 mRNA level were up-regulated by ethanol treatment. ApoE mRNA level was not affected significantly by ethanol. The study suggested an alteration in cholesterol homeostasis in ethanol treated astrocytes.