The development of tolerance to a drug at the level of the neuron reflects a homeostatic mechanism by which neurons respond to perturbations of their function by external stimuli. Acute functional tolerance (AFT) to ethanol is a fast compensatory response that develops within a single drug session and normalizes neuronal function despite the continued presence of the drug. We performed a genetic screen to identify genes required for the development of acute functional tolerance to ethanol in the nematode C. elegans. We identified mutations affecting multiple genes in a genetic pathway known to regulate levels of triacylglycerols (TAGs) via the lipase LIPS-7, indicating that there is an important role for TAGs in the development of tolerance. Genetic manipulation of lips-7 expression, up or down, produced opposing effects on ethanol sensitivity and on the rate of development of AFT. Further, decreasing cholesterol levels through environmental manipulation mirrored the effects of decreased TAG levels. Finally, we found that genetic alterations in the levels of the TAG lipase LIPS-7 can modify the phenotype of gain-of-function mutations in the ethanol-inducible ion channel SLO-1, the voltage- and calcium-sensitive BK channel. This study demonstrates that the lipid milieu modulates neuronal responses to ethanol that include initial sensitivity and the development of acute tolerance. These results lend new insight into studies of alcohol dependence, and suggest a model in which TAG levels are important for the development of AFT through alterations of the action of ethanol on membrane proteins.