Gestational exposure to ethanol causes defects in neuronal migration, fasciculation, and synaptogenesis, developmental events that depend on the patterned expression and function of cell adhesion molecules (CAMs). Recombinant human osteogenic protein-1 (hOP-1) increases cell-cell adhesion and promotes cell clustering in proliferating neuroblastoma x glioma hybrid NG108-15 cells by strongly inducing N-CAM and L1. Here we show that concentrations of ethanol achieved during social drinking inhibit hOP-1-induced cell clustering without affecting cell proliferation, the induction and cell surface expression of N-CAM and L1, or the alternative splicing and sialylation of N-CAM. This inhibition was reproduced by other alcohols in proportion to their chain length, but not by teratogenic anticonvulsants or phenylalanine. Ethanol inhibition of hOP-1 morphogenesis was inversely proportional to the concentration of hOP-1 and, hence, to the levels of N-CAM and L1. Low concentrations of ethanol (IC50 5-10 mM) inhibited cell-cell adhesion in hOP-1-treated cells, and this action too was reproduced more potently by propanol and butanol. Ethanol may perturb brain and skeletal development by inhibiting CAM-mediated cell-cell interactions.