Alcohol exposure during development can cause variable neurofacial deficit and growth retardation known as fetal alcohol spectrum disorders (FASD). The mechanism underlying FASD is not fully understood. However, alcohol, which is known to affect methyl donor metabolism, may induce aberrant epigenetic changes contributing to FASD. Using a tightly controlled whole-embryo culture, we investigated the effect of alcohol exposure (88mM) at early embryonic neurulation on genome-wide DNA methylation and gene expression in the C57BL/6 mouse. The DNA methylation landscape around promoter CpG islands at early mouse development was analyzed using MeDIP (methylated DNA immunoprecipitation) coupled with microarray (MeDIP-chip). At early neurulation, genes associated with high CpG promoters (HCP) had a lower ratio of methylation but a greater ratio of expression. Alcohol-induced alterations in DNA methylation were observed, particularly in genes on chromosomes 7, 10, and X; remarkably, a >10 fold increase in the number of genes with increased methylation on chromosomes 10 and X was observed in alcohol-exposed embryos with a neural tube defect phenotype compared to embryos without a neural tube defect. Significant changes in methylation were seen in imprinted genes, genes known to play roles in cell cycle, growth, apoptosis, cancer, and in a large number of genes associated with olfaction. Altered methylation was associated with significant (p<0.01) changes in expression for 84 genes. Sequenom EpiTYPER DNA methylation analysis was used for validation of the MeDIP-chip data. Increased methylation of genes known to play a role in metabolism (Cyp4f13) and decreased methylation of genes associated with development (Nlgn3, Elavl2, Sox21 and Sim1), imprinting (Igf2r) and chromatin (Hist1h3d) was confirmed. In a mouse model for FASD, we show for the first time that alcohol exposure during early neurulation can induce aberrant changes in DNA methylation patterns with associated changes in gene expression, which together may contribute to the observed abnormal fetal development.