This review discusses the effects of prenatal alcohol exposure on the developing brain and the potential use of derived peptides from activity-dependent neurotrophic factor (ADNF) and activity-dependent neuroprotective protein (ADNP) in neuroprotection against the insults of alcohol. Alcohol is known to impede the growth of the central nervous system and to induce neurodegeneration through cellular apoptosis. Sari et al. have shown that prenatal alcohol exposure reduced the fetal brain weight, the size of the brain regions and the number of serotonin (5-HT) neurons. Prenatal alcohol exposure compromises neural tube midline development. Sari et al. further suggested that the timing of alcohol exposure during pregnancy is critical to the induction of deficits in 5-HT neurons, as well as other types of neurons and consequently results in deficits in neural tube development. ADNF and ADNP are glial-derived proteins discovered to be induced by vasoactive intestinal peptide (VIP). These proteins are expressed during embryonic development. Functional assays and genetic manipulations have identified these proteins as highly important for neural tube closure and brain formation/development. The peptide derivatives of ADNF, ADNF-14 (VLGGGSALLRSIPA), ADNF-9 (or SALLRSIPA = SAL) and of ADNP, NAPVSIPQ = NAP have shown neuroprotective effects and have been proven to prevent brain damage associated with prenatal alcohol exposure in animals. Here, we discuss the many aspects of alcohol-associated growth restriction in the developing brain and the potential inhibition of this severe phenotype through the use of neuroprotective peptides.