We previously found that ethanol has complex effects on hippocampal synaptic plasticity, inhibiting long-term potentiation (LTP) and long-term depression by different mechanisms. The block of long-term depression appears to be mediated by effects on N-methyl-d-aspartate receptors, whereas the block of LTP involves augmented inhibition via gamma-aminobutyric acid-A receptors (GABA(A)Rs). To pursue factors contributing to effects on LTP, we examined the ability of various concentrations of ethanol to block LTP in the CA1 region of rat hippocampal slices. Complete LTP block required 60 mm ethanol. LTP block was enhanced at lower ethanol concentrations in the presence of (3alpha5alpha)-3-hydroxypregnan-20-one, a GABA(A)R-potentiating neurosteroid, suggesting that neurosteroids may be important contributors to the effects of ethanol on LTP. Consistent with this, we found that block of LTP by 60 mm ethanol was overcome by coadministration of a cyclodextrin that binds and removes lipophilic neurosteroids. More specifically, treatment of slices with finasteride, an agent that inhibits the synthesis of 5alpha-reduced neurosteroids, or with an agent that inhibits the effects of 5alpha-reduced neurosteroids on GABA(A)Rs overcame the effects of 60 mm ethanol on LTP. Taken together, these results indicate that acute production of GABA(A)R-enhancing neurosteroids plays a key role in mediating the effects of ethanol on LTP.