Fetal alcohol exposure (FAE) can lead to a variety of behavioral and physiological disturbances later in life. Understanding how alcohol (ethanol, EtOH) affects fetal brain development is essential to guide the development of better therapeutics for FAE. One of EtOH's many pharmacological targets is the γ-aminobutyric acid type A receptor (GABAAR), which plays a prominent role in early brain development. Acute EtOH potentiates inhibitory currents carried by certain GABAAR subtypes, whereas chronic EtOH leads to persistent alterations in GABAAR subunit composition, localization and function. We recently introduced a flavonoid compound, dihydromyricetin (DHM), which selectively antagonizes EtOH's intoxicating effects in vivo and in vitro at enhancing GABAAR function as a candidate for alcohol abuse pharmacotherapy. Here, we studied the effect of FAE on physiology, behavior and GABAAR function of early adolescent rats and tested the utility of DHM as a preventative treatment for FAE-induced disturbances. Gavage administration of EtOH (1.5, 2.5, or 5.0 g/kg) to rat dams on day 5, 8, 10, 12, and 15 of pregnancy dose-dependently reduced female/male offspring ratios (largely through decreased numbers of female offspring) and offspring body weights. FAE (2.5 g/kg) rats tested on postnatal days (P) 25-32 also exhibited increased anxiety and reduced pentylenetetrazol (PTZ)-induced seizure threshold. Patch-clamp recordings from dentate gyrus granule cells (DGCs) in hippocampal slices from FAE (2.5 g/kg) rats at P25-35 revealed reduced sensitivity of GABAergic miniature inhibitory postsynaptic currents (mIPSCs) and tonic current (Itonic) to potentiation by zolpidem (0.3 μM). Interestingly, potentiation of mIPSCs by gaboxadol increased, while potentiation of Itonic decreased in DGCs from FAE rats. Co-administration of EtOH (1.5 or 2.5 g/kg) with DHM (1.0 mg/kg) in pregnant dams prevented all of the behavioral, physiological, and pharmacological alterations observed in FAE offspring. DHM administration alone in pregnant rats had no adverse effect on litter size, progeny weight, anxiety level, PTZ seizure threshold, or DGC GABAAR function. Our results indicate that FAE induces long-lasting alterations in physiology, behavior, and hippocampal GABAAR function and that these deficits are prevented by DHM co-treatment of EtOH-exposed dams. The absence of adverse side effects and the ability of DHM to prevent FAE consequences suggest that DHM is an attractive candidate for development as a treatment for prevention of fetal alcohol spectrum disorders.