Prenatal alcohol (ethanol) exposure (PAE) is the underlying cause for a variety of birth defects and neurodevelopmental deficits referred to as "Fetal Alcohol Spectrum Disorders (FASD)". The more visible phenotypes caused by PAE include growth retardation, and characteristic craniofacial abnormalities associated with functional and structural damage to the central nervous system. Ethanol is a teratogenic agent itself; but it can also alter gene expression. These changes may contribute to the spectrum of effects and different phenotypes that are dependent on alcohol metabolism, as well as the timing and duration of alcohol exposure. Evidence from both human patients and animal models show that genetic factors and epigenetic mechanisms such as DNA methylation, histone post-translational modifications and noncoding RNAs, contribute to the gene expression changes caused by ethanol. Not all embryos that are exposed to alcohol during development exhibit FASD symptoms after birth. FASD patients may present severe birth defects, while others are normal in physical appearance but present a variety of cognitive and behavioral difficulties. It has been hypothesized that maternal and paternal genetic factors may contribute to the sensitivity, resistance or vulnerability of the fetus to alcohol. Moreover, the epigenome is highly sensitive to a multitude of environmental insults including PAE. Studies also show 'transgenerational' effects of alcohol. In such cases, maternal or paternal preconception alcohol consumption could lead to FASD-like phenotypes in the newborn. Thus, the phenotypes in FASD can be modified by interplay between maternal/paternal genetic factors and epigenetic mechanisms. This current review summarizes the contribution of genetic and epigenetic mechanisms in FASD pathobiology, and how this information could be utilized for prevention, early diagnosis and potentially treatment of the affected individuals.