Prenatal exposure to alcohol is thought to be the most prevalent nongenetic cause of a wide range of neurodevelopmental deficits. Insufficient thyroid hormone levels are one mechanism that hampers development of the alcohol-exposed brain, and we hypothesized that altered dosage of the imprinted thyroid hormone-inactivating gene deiodinase-III (Dio3) is responsible. To follow parent-of-origin allelic expression of Dio3 in the fetal and adult offspring of alcohol-consuming and control dams, we reciprocally crossed 2 polymorphic rat strains. In the frontal cortex, prenatal alcohol exposure altered imprinting patterns and total expression of Dio3 in the fetus and produced a permanent hypothyroid milieu in the adult. In the hippocampus, alcohol affected the paternal and total expression of Dio3 in the fetus and in the adult male, where thyroid hormone levels were concomitantly increased. Hippocampus-dependent behavioral deficits were identified exclusively in males, suggesting they are dependent on aberrant allelic Dio3 expression. None of these effects were observed in offspring of the reciprocal cross. Thus, genetic background and sex modify vulnerability to prenatal alcohol via brain region-specific expression of Dio3. This finding implies that phenotypic heterogeneity in human fetal alcohol spectrum disorder can be linked to genetic vulnerability in affected brain regions.