Consequences of prenatal exposure to ethanol (E) include morphological, physiological, and cognitive deficits and are collectively classified as fetal alcohol spectrum disorders. Adult prenatal E exposed offspring show insulin resistance, and given that in utero hyperglycemic environment can cause metabolic disorders in subsequent generations; we investigated the effects of grandmaternal E on functional glucose and insulin responses of the second generation. Sprague-Dawley (S) rat dams, mated with S males, received E-containing liquid diet and two different control diets between gestational days 8 and 20. Additionally, because prenatal E-induced behavioral deficits can be reversed by simultaneous thyroxine (T4) treatment, another group of dams received 0.3 mg/l T4 in their E diet. Their first-generation (F1) offspring were mated with control Brown Norway (B) males or females to produce SB and BS F2 progeny. Dams consuming E during pregnancy were hyperglycemic, and their F1 offspring showed insulin resistance in the glucose tolerance test (GTT). However, F2 responses to GTT varied based on the sex of prenatal E-exposed parent. BS F2 females, and both male and female SB F2 progeny, displayed hypoglycemic and hyperinsulinemic GTT response patterns. Although administering T4 to E dams normalized thyroid function of the F1 generation, it did not reverse their prenatal E-induced metabolic dysfunction. In contrast, administration of T4 to the alcohol-consuming grandmother reversed or alleviated the aberrant GTT responses of the F2 progeny. Prenatal E-induced dysregulation of glucose metabolism can affect the next generation, possibly via ethanol effects on the germline of the F1 fetus.