Fetal alcohol syndrome is the leading known cause of mental retardation. The syndrome, defined as growth retardation, midface hypoplasia, and neurologic dysfunction, represents only part of the spectrum of fetal alcohol effects. The biochemical mechanism of teratogenesis is unknown. In adults, metabolites of ethanol, FAEE, are known to accumulate in major organs. The formation of FAEE is catalyzed by a family of enzymes, FAEE synthases. Our hypothesis is that accumulation of FAEE in the embryo results in fetal alcohol syndrome. We have developed assays for FAEE and FAEE synthase activity using mg of tissue. Using these assays, we have shown the following: Human placenta, mouse placenta, heart, and liver are active in catalyzing the formation of FAEE. One h after maternal ethanol administration on gestational d 14, mouse placenta and fetuses accumulated significant quantities of FAEE. The fatty acid incorporated into FAEE was tissue dependent. Tissues from pregnant animals given ethanol on gestational d 7 showed persistence of FAEE on gestational d 14. We conclude that: 1) human and mouse placentas have significant FAEE synthase activity, 2) mouse heart, liver, placenta, and fetal tissues accumulate significant amounts of FAEE after maternal ethanol exposure, 3) there is tissue specificity for the fatty acid incorporated into FAEE, and 4) FAEE may persist for 7 d in placentas. These results provide a basis for further research into the role of FAEE in the development of fetal alcohol syndrome.