Chronic alcohol exposure alters the function of alveolar macrophages (AM), impairing immune defenses in both adult and neonatal lungs. Fatty acid ethyl esters (FAEEs) are biological markers of prenatal alcohol exposure in newborns. FAEEs contribute to alcohol-induced mitochondrial (MT) damage in multiple organs. We hypothesized that in utero ethanol exposure would increase FAEEs in the neonatal lung and that direct exposure of neonatal AM to FAEEs would contribute to MT injury and cellular dysfunction. FAEEs were measured in neonatal guinea pig lungs after ± in utero ethanol exposure via gas chromatography/mass spectrometry. The NR8383 cell line and freshly isolated neonatal guinea pig AM were exposed to ethyl oleate (EO) in vitro. MT membrane potential, MT reactive oxygen species generation (mROS), phagocytosis, and apoptosis were evaluated after exposure to EO ± the MT-specific antioxidant mito-TEMPO (mitoT) or ± the pan-caspase inhibitor Z-VAD-FMK. Whole lung FAEEs were compared using the Mann-Whitney U-test. Cellular results were analyzed using 1-way analysis of variance, followed by the Student-Newman-Keuls Method for post hoc comparisons. In utero ethanol significantly increased ethyl linoleate and the combinations of ethyl oleate + linoleate + linolenate (OLL), and OLL + stearate in the neonatal lung. In vitro EO caused significant MT dysfunction in both NR8383 and primary neonatal AM, as indicated by increased mROS and loss of MT membrane potential. Impaired phagocytosis and apoptosis were significantly increased in both the cell line and primary AM after EO exposure. MitoT conferred significant but only partial protection against EO-induced MT injury, as did caspase inhibition with Z-VAD-FMK. In utero ethanol exposure increased FAEEs in the neonatal guinea pig lung. Direct exposure to the FAEE EO significantly contributed to AM dysfunction, in part via oxidant injury to the MT and in part via secondary apoptosis.