Acute alcohol exposure alters the trafficking and function of many G-protein-coupled receptors (GPCRs) that are associated with aberrant behavioral responses to alcohol. However, the molecular mechanisms underlying alcohol-induced changes in GPCR function remain unclear. β-Arrestin is a key player involved in the regulation of GPCR internalization and thus controls the magnitude and duration of GPCR signaling. Although β-arrestin levels are influenced by various drugs of abuse, the effect of alcohol exposure on β-arrestin expression and β-arrestin-mediated GPCR trafficking is poorly understood. Here, we found that acute ethanol exposure increases β-arrestin2 degradation via its increased ubiquitination in neuroblastoma-2a (N2A) cells and rat prefrontal cortex (PFC). β-Arrestin2 ubiquitination was likely mediated by the E3 ligase MDM2 homolog (MDM2), indicated by an increased coupling between β-arrestin2 and MDM2 in response to acute ethanol exposure in both N2A cells and rat PFC homogenates. Importantly, ethanol-induced β-arrestin2 reduction was reversed by siRNA-mediated MDM2 knockdown or proteasome inhibition in N2A cells, suggesting β-arrestin2 degradation is mediated by MDM2 through the proteasomal pathway. Using serotonin 5-HT1A receptors (5-HT1ARs) as a model receptor system, we found that ethanol dose-dependently inhibits 5-HT1AR internalization and that MDM2 knockdown reverses this effect. Moreover, ethanol both reduced β-arrestin2 levels and delayed agonist-induced β-arrestin2 recruitment to the membrane. We conclude that β-arrestin2 dysregulation by ethanol impairs 5-HT1AR trafficking. Our findings reveal a critical molecular mechanism underlying ethanol-induced alterations in GPCR internalization and implicate β-arrestin as a potential player mediating behavioral responses to acute alcohol exposure.