Prenatal ethanol exposure (PEE) inhibits longitudinal growth of fetal bones, but the underlying mechanisms remain unknown. In this study, we aimed to investigate how PEE induces the retardation of long bone development in fetal rats. Pregnant Wistar rats were treated with ethanol or distilled water (control group) by gavage from gestational day (GD) 9 to 20. Fetuses were delivered by cesarean section on GD20. Fetal sera were collected for assessing corticosterone (CORT) level. Fetal long bones were harvested for histochemical, immunohistochemical and gene expression analysis. Primary chondrocytes were treated with ethanol or CORT for analyzing genes expression. PEE fetuses showed a significant reduction in birth weight and body length. The serum CORT concentration in PEE group was significantly increased, while the body weight, body length and femur length all were significantly decreased in the PEE group. The length of the epiphyseal hypertrophy zone was enlarged, whereas the length of the primary ossification center was significantly reduced in PEE fetuses. TUNEL assay showed reduced apoptosis in the PEE group. Further, the gene expression of osteoprotegerin (OPG) was markedly up-regulated. In vitro experiments showed that CORT (but not ethanol) treatment significantly activated the expression of OPG, while the application of glucocorticoid receptor inhibitor, mifepristone, attenuated these change induced by CORT. These results indicated that PEE-induced glucocorticoid over-exposure enhanced the expression of OPG in fetal epiphyseal cartilage and further lead to the suppressed osteoclast differentiation in the chondro-osseous junction and consequently inhibited the endochondral ossification in long bones of fetal rats.