Fetal alcohol spectrum disorder caused by prenatal alcohol exposure includes ocular abnormalities (microphthalmia, photoreceptor dysfunction, cataracts). Zebrafish embryos exposed to ethanol from gastrulation through somitogenesis show severe ocular defects, including microphthalmia and photoreceptor differentiation defects. Ethanol-treated zebrafish had an enlarged ciliary marginal zone (CMZ) relative to the retina size and reduced Müller glial cells (MGCs). Ethanol exposure produced immature photoreceptors with increased proliferation, indicating cell cycle exit failure. Signaling mechanisms in the CMZ were affected by embryonic ethanol exposure, including Wnt signaling in the CMZ, Notch signaling and neurod gene expression. Retinoic acid or folic acid co-supplementation with ethanol rescued Wnt signaling and retinal differentiation. Activating Wnt signaling using GSK3 inhibitor (LSN 2105786; Eli Lilly and Co.) restored retinal cell differentiation pathways. Ethanol exposed embryos were treated with Wnt agonist, which rescued Wnt-active cells in the CMZ, Notch-active cells in the retina, proliferation, and photoreceptor terminal differentiation. Our results illustrate the critical role of Wnt signaling in ethanol-induced retinal defects.