Ethanol is known to disrupt normal sleep rhythms; however, the cellular basis for this influence is unknown. This study uses an in vitro slice preparation coupled with electrophysiological recordings to probe neuronal responses to acute ethanol exposure. Recordings were conducted in ferret and rat thalamic slices, since thalamic circuitry is an integral component of sleep/wake cycles and sleep spindles. A key mediator of spindle wave activity is the low-threshold calcium current (T-type current). The T-type current underlies burst responses in the lateral geniculate and thalamic reticular nuclei that are important in spindle propagation. Whole cell patch recordings in thalamic brain slices revealed that ethanol has a differential, dose-dependent effect on the native T-type current in thalamic relay cells. Low concentrations of ethanol (2.5, 5, and 10 mM) enhance T-type current (n = 35), whereas higher concentrations of ethanol (20 and 50 mM) decrease T-type current (n = 27). To address whether this dose-dependent effect was due to variation between cells, in a subset we verified the differential effect within the same cell (n = 7). In an effort to examine whether the biphasic effects on the current were due to the order of ethanol exposures, we varied the order of high and low ethanol concentrations within the same cell. The ability of ethanol to perturb calcium currents in thalamic relay cells may provide a mechanistic framework for the well documented disruptions in sleep/wake behavior in subjects with ethanol exposure.