Although alcohol (i.e., ethanol) is a major drug of abuse, the acute functional effects of ethanol on the reward circuitry are not well defined in vivo. In freely moving rats, we examined the effect of intravenous ethanol administration on neuronal unit activity in the posterior ventral tegmental area (VTA), a central component of the mesolimbic reward system. VTA units were classified as putative dopamine (DA) neurons, fast-firing GABA neurons, and unidentified neurons based on a combination of electrophysiological properties and DA D2 receptor pharmacological responses. A gradual infusion of ethanol significantly altered the firing rate of DA neurons in a concentration-dependent manner. The majority of DA neurons were stimulated by ethanol and showed enhanced burst firing activity, but a minority was inhibited. Ethanol also increased the proportion of DA neurons that exhibited pacemaker-like firing patterns. In contrast, ethanol mediated a variety of effects in GABA and other unidentified neurons that were distinct from DA neurons, including a nonlinear increase in firing rate, delayed inhibition, and more biphasic activity. These results provide evidence of discrete electrophysiological effects of ethanol on DA neurons compared with other VTA cell types, suggesting a complex role of the VTA in alcohol-induced responses in freely moving animals.