There has been a great deal of activity in recent years in the study of the direct effects of ethanol on the dopamine reward system originating in the ventral tegmental area (VTA). In addition, recent evidence suggests that acetaldehyde formed from ethanol in the brain or periphery may be a crucial factor in the central effects of ethanol. This critical review examines the actions of ethanol and acetaldehyde on neurons of the VTA and the possible interactions with stress, with a focus on electrophysiological studies in vivo and in vitro. Ethanol has specific effects on dopamine neurons and there is recent evidence that some of the in vivo and in vitro effects of ethanol are mediated by acetaldehyde. Stress has some analogous actions on neuronal activity in the VTA, and the interactions between the effects of stress and alcohol on VTA neurons may be a factor in ethanol-seeking behavior. Taken together, the evidence suggests that stress may contribute to the activating effects of ethanol on dopamine VTA neurons, that at least some actions of ethanol on dopamine VTA neurons are mediated by acetaldehyde, and that the interaction between stress and alcohol could play a role in susceptibility to alcoholism. The link between acetaldehyde and ethanol actions on brain reward pathways may provide a new avenue for the development of agents to reduce alcohol craving.