Acute ethanol administration impairs performance in many cognitive tasks that are dependent on hippocampal function. For example, acute ethanol administration produces dose-dependent impairments in spatial learning. Ethanol also decreases the spatial specificity of hippocampal place cells. Such findings raise the possibility that ethanol affects learning and memory by altering, either directly or indirectly, neuronal activity in the hippocampus and related structures. Acute ethanol administration induces a dose- and time-dependent increase in brain concentration of the neuroactive steroid allopregnanolone. Allopregnanolone is a potent GABAA receptor agonist and produces effects similar to the effects produced by ethanol. Blockade of de novo biosynthesis of allopregnanolone alters many of ethanol's effects including ethanol-induced suppression of spontaneous activity in medial septum/diagonal band of Broca neurons and hippocampal pyramidal neurons. These findings suggest that ethanol-induced increases in allopregnanolone levels might play a central role in the effects of acute ethanol on cognitive processing and hippocampal function. The impact of ethanol on spatial cognitive processing and hippocampal function will be reviewed. In addition, the possibility that ethanol-induced changes in neuroactive steroid levels contribute to the impact of ethanol on spatial learning and hippocampal function will be explored.