Direct effects of ethanol on the interaction of cytosolic lipid transfer proteins with ligands are not known. In this study, recombinant liver fatty acid binding protein (L-FABP) and sterol carrier protein-2 (SCP-2) were used in conjunction with a series of fluorescent fatty acid probe molecules to compare the relative dielectric properties of the ligand binding sites and to examine the effects of ethanol in vitro on ligand interaction with these proteins. L-FABP and SCP-2 exhibited broad but distinct ligand specificities. Although NBD-stearic acid bound with high affinity to both proteins, emission spectra showed that the relative dielectric constant of the ligand binding site in SCP-2 was significantly lower than in L-FABP, 2 vs 24. Furthermore, affinities of L-FABP for NBD-fatty acid probes were NBD-stearic acid > NBD- lauric acid >>> NBD-hexanoic acid, NBD-acetic acid. In contrast, SCP-2 bound only NBD-stearic acid with a K(d) of 0.23 μM and B(max) of 0.98 mol/mol. This observation of SCP-2 specifically binding the fluorescent NBD-stearic acid was confirmed with RdB-stearic acid and the naturally fluorescent cis- parinaric acid, both of which had similar affinities and stoichiometries. Ethanol in vitro had no effect on L-FABP-NBD-stearic acid binding. However, ethanol at physiological concentrations (25 mM) dramatically inhibited NBD- stearic acid binding to SCP-2. In conclusion, the data show that both L-FABP and SCP-2 specifically bind fluorescent fatty acids. However, the ligand binding sites of L-FABP and SCP-2 differed dramatically in their dielectric properties and their sensitivity to ethanol.