Abstract: Alcohol exposure, as a widespread environmental factor, is highly toxic and teratogenic. Embryonic stem cells (ESCs) are pluripotent and key to development, and their gene expression is tightly regulated, allowing the cells to differentiate without self-renewal. Numerous studies showed that alcohol is an important factor affecting the differentiation of ESCs. In this paper, we systematically summarized four major molecular mechanisms underlying alcohol associated differentiation of ESCs: (1) inhibition of the Wnt signaling pathway; (2) restriction of the mitogen-activated protein kinase/extracellular signal-regulated kinase (MAPK/ERK) pathway; (3) alteration of the expression of pluripotent transcription factors; and (4) activation of the nuclear transcriptional program. Through the above mechanisms, alcohol induces aberrant expression of differentiation-related genes and alters the direction of cellular differentiation towards specific lineages, thereby affecting normal embryonic development. Based on the studies on ESCs modeling and other in vitro and in vivo differentiation experiments, the molecular basis of how alcohol affects differentiation by interfering with signaling networks and transcriptional regulation was elucidated, and the results of current research in this field were also summarized, which is crucial for understanding alcohol-mediated toxic effects.