Alcohol use and abuse has many harmful effects, especially to children exposed prenatally, including fetal alcohol spectrum disorders (FASDs). The disabilities due to fetal alcohol exposure continue throughout life and cause major financial burdens to society. The molecular mechanisms underlying FASDs are not well understood. We have taken a genetic approach to characterize ethanol’s effect on changing a discrete cell fate decision during embryogenesis in the nematode, Caenorhabditis elegans (C. elegans). Our preliminary data suggest that ethanol can affect the development of AWC neurons, a pair of olfactory neurons in C. elegans. We suggest that lipids can protect AWC neurons from ethanol’s effects. Importantly, we show that altering the metabolism of triacylglycerols (TAGs) can rescue this cell fate change in behavioral assays. By identifying molecular causes of fetal alcohol damage in humans we hope to be able to develop a greater understanding of how to prevent these detrimental effects.