Prenatal alcohol exposure is known to have many profound detrimental effects on human fetal development (fetal alcohol spectrum disorders), which may manifest as lifelong disabilities. However, how alcohol affects the auditory/vestibular system is still largely unknown. This is the first study to investigate morphological effects of alcohol on the developing octavolateral system (the inner ear and lateral line) using the zebrafish, Danio rerio. Zebrafish embryos of 2 hours post fertilization (hpf) were treated in 2% alcohol for 48 hours and screened at 72 hpf for morphological defects of the inner ear and lateral line. Octavolateral organs from both alcohol-treated and control zebrafish were examined using light, confocal, and scanning electron microscopy. We observed several otolith phenotypes for alcohol-treated zebrafish including zero, one, two abnormal, two normal, and multiple otoliths. Results of this study show that alcohol treatment during early development impairs the inner ear (smaller ear, abnormal otoliths, and fewer sensory hair cells) and the lateral line (smaller neuromasts, fewer neuromasts and hair cells per neuromast, and shorter kinocilia of hair cells). Early embryonic alcohol exposure may also result in defects in hearing, balance, and hydrodynamic function of zebrafish.