Previously we demonstrated that fetal alcohol exposure attenuates hypoxic cerebral vasodilation in fetal and neonatal sheep. One mechanism may be altered expression of brain vasoactive substances. We hypothesized that early fetal alcohol exposure alters the number of fetal neurons expressing vasoactive intestinal peptide (VIP), a potent cerebral vasodilator. Thirteen pregnant ewes received daily i.v. infusions of alcohol (1.5 g/kg) or saline on days 30–54 of gestation (term = 145 days). Fourteen fetal brains (6 alcohol-exposed, 8 saline control) were obtained on gestational day 126. Using unbiased stereology, we counted immunohistochemically-labeled VIP neurons in one half of each forebrain with an optical fractionator. The total NeuN-labeled neurons were similarly counted. Alcohol-exposed fetal sheep brains had fewer VIP-immunopositive neurons per hemisphere, 14.6 × 106, compared to saline controls, 19.8 × 106. The total neuron number was not different, 1.19 × 109 versus 1.23 × 109 respectively, indicating a selective decrease in VIP neurons as a result of alcohol exposure. In sheep, alcohol exposure early in gestation is associated with fewer VIP-producing neurons later in gestation compared to saline controls; therefore, alcohol-related changes in the number of VIP-expressing neurons may be responsible in part for the attenuated hypoxic cerebral vasodilation described in fetal and neonatal sheep exposed to alcohol earlier in gestation.