Exposure to ethanol during fetal development produces long-lasting neurobehavioral deficits caused by functional alterations in neuronal circuits across multiple brain regions. Therapeutic interventions currently used to treat these deficits are only partially efficacious, which is a consequence of limited understanding of the mechanism of action of ethanol. Here, we describe a novel effect of ethanol in the developing brain. Specifically, we show that exposure of rats to ethanol in vapor chambers during the equivalent to the third trimester of human pregnancy causes brain micro-hemorrhages. This effect was observed both at low and high doses of ethanol vapor exposure, and was not specific to this exposure paradigm as it was also observed when ethanol was administered via intra-esophageal gavage. The vast majority of the micro-hemorrhages were located in the cerebral cortex but were also observed in the hypothalamus, midbrain, olfactory tubercle, and striatum. The auditory, cingulate, insular, motor, orbital, retrosplenial, somatosensory, and visual cortices were primarily affected. Immunohistochemical experiments showed that the micro-hemorrhages caused neuronal loss, as well as reactive astrogliosis and microglial activation. Analysis with the Catwalk test revealed subtle deficits in motor function during adolescence/young adulthood. In conclusion, our study provides additional evidence linking developmental ethanol exposure with alterations in the fetal cerebral vasculature. Given that this effect was observed at moderate levels of ethanol exposure, our findings lend additional support to the recommendation that women abstain from consuming alcoholic beverages during pregnancy.