Ethanol exposure inhibits protein synthesis and causes cell death in the developing central nervous system. The double-stranded RNA (dsRNA)-activated protein kinase (PKR), a serine/threonine protein kinase, plays an important role in translational regulation and cell survival. PKR has been well known for its anti-viral response. Upon activation by viral infection or dsRNA, PKR phosphorylates its substrate, the alpha-subunit of eukaryotic translation initiation factor-2 (eIF2alpha) leading to inhibition of translation initiation. It has recently been shown that, in the absence of a virus or dsRNA, PKR can be activated by direct interactions with its protein activators, PACT, or its mouse homologue, RAX. We have demonstrated that exposure to ethanol increased the phosphorylation of PKR and eIF2alpha in the developing cerebellum. The effect of ethanol on PKR/eIF2alpha phosphorylation positively correlated to the expression of PACT/RAX in cultured neuronal cells. Using PKR inhibitors and PKR null mouse fibroblasts, we verified that ethanol-induced eIF2alpha phosphorylation was mediated by PKR. Overexpression of a wild-type RAX dramatically enhanced sensitivity to ethanol-induced PKR/eIF2alpha phosphorylation, as well as translational inhibition and cell death. In contrast, overexpression of a mutant (S18A) RAX inhibited ethanol-mediated PKR/eIF2alpha activation. Ethanol promoted PKR and RAX association in cells expressing wild-type RAX but not in cells expressing S18A RAX. S18A RAX functioned as a dominant negative protein and blocked ethanol-induced inhibition of protein synthesis and cell death. Our results suggest that the interactions between PKR and PACT/RAX modulate the effect of ethanol on protein synthesis and cell survival in the central nervous system.