Ethanol exposure during fetal development is a leading cause of long-term cognitive impairments. Studies suggest that ethanol exposure have deleterious effects on the hippocampus, a brain region that is important for learning and memory. Ethanol exerts its effects, in part, via alterations in glutamatergic neurotransmission, which is critical for the maturation of neuronal circuits during development. The current literature strongly supports the growing evidence that ethanol inhibits glutamate release in the neonatal CA1 hippocampal region. However, the exact molecular mechanism responsible for this effect is not well understood. In this study, we show that ethanol enhances endocannabinoid (EC) levels in cultured hippocampal neurons, possibly through calcium pathways. Acute ethanol depresses miniature post-synaptic current (mEPSC) frequencies without affecting their amplitude. This suggests that ethanol inhibits glutamate release. The CB1 receptors (CB1Rs) present on pre-synaptic neurons are not altered by acute ethanol. The CB1R antagonist SR 141716A reverses ethanol-induced depression of mEPSC frequency. Drugs that are known to enhance the in vivo function of ECs occlude ethanol effects on mEPSC frequency. Chelation of post-synaptic calcium by EGTA antagonizes ethanol-induced depression of mEPSC frequency. The activation of CB1R with the selective agonist WIN55,212-2 also suppresses the mEPSC frequency. This WIN55,212-2 effect is similar to the ethanol effects and is reversed by SR141716A. In addition, tetani-induced excitatory post-synaptic currents (EPSCs) are depressed by acute ethanol. SR141716A significantly reverses ethanol effects on evoked EPSC amplitude in a dual recording preparation. These observations, taken together, suggest the participation of ECs as retrograde messengers in the ethanol-induced depression of synaptic activities.