For being the most commonly used and abused intoxicant among pretty much all of humankind, there is a remarkable paucity of information available regarding exactly how alcohol (ethanol) affects the brain. Part of this is likely due to how well alcohol's effects, but not necessarily the reasons for them, are already understood from medical and therapeutic models -- newer drugs get more attention because their models are still in development. Also, the ethanol molecule is tiny, comparatively speaking, and seems to be able to penetrate and actively make changes to many separate brain areas, so its effects are mediated via more channels than more selective drugs.

At any rate, there seem to be three main interactions responsible for alcohol's intoxicating properties:

  1. Endogenous opioid release: Endogenous opioids are peptides produced in the central nervous system and endocrine system which activate the same receptors as morphine, heroin, and other man-made opiates. They're usually released due to pain or stress, and serve to lessen the impact of those stimuli, inducing pain relief or even euphoria. Upon exposure to alcohol, endogenous opioid release is increased in the brain and the pituitary gland, and endorphin/enkephalin (responsible for transmission/reception of endogenous opioids, respectively) gene expression is increased. This action is probably responsible for the feelings of well-being or euphoria experienced with alcohol. Based on success in studies done with naltrexone, an opioid receptor blocker, this pathway is thought to be responsible for psychological alcohol addiction as well.

  2. GABA system sensitization: GABA (gamma-aminobutyric acid) is the brain's primary inhibitory neurotransmitter, responsible for decreasing the excitability of neurons. Increased GABA activity thus leads to sedation and lessened anxiety -- Valium and related benzodiazepines work by increasing GABA activity. Alcohol, interestingly enough, can in some situations mimic the GABA molecule itself at a receptor site, causing exactly the same effect as an increased concentration of real GABA. For more on this, see GABAergic drug use and memory loss

    For short term, recreational alcohol use, the increased activation causes a pleasant dulling of sensation and no appreciable long term effects. During long-term abuse of the drug, however, the GABA receptors respond to constant increased activity by desensitizing, so that regular GABA levels can no longer sufficiently activate them. Desensitization is possibly why alcohol withdrawal can cause anxiety, panic attacks, seizures, and other responses that would seem to be based on neuronal over-excitation.

  3. NMDA receptor blockade: NMDA channels are one way that calcium ions may enter a neuron under certain circumstances, causing long-term potentiation of that neuron and (theoretically, at least) the formation of long-term memory in the overall system. Alcohol has the effect of blocking NMDA channels so that those processes occur more slowly or not at all. One effect of this is a euphoric, even mildly psychedelic shift in overall mental activity, a much weaker version of the dissociative intoxication also given by DXM or Ketamine use. Also like those drugs, the NMDA blockade is none-too-healthy for the brain itself, causing exitotoxicity and cell death possibly even in neurons unfazed by the alcohol. Years of accumulating this widespread brain damage probably contribute to Korsakoff syndrome, and other non-nutritional cerebral atrophy associated with alcohol.