Context: Although there is now considerable evidence that genetic effects play a critical role in the development of alcohol dependence (AD), theoretical and methodological limitations of this literature require caution in describing the etiology and development of this disorder. Objective: To disentangle genetic and environmental effects on AD by means of the infrequently used, yet potentially powerful, offspring-of-twins design. Design: Offspring of twins. Participants: Male monozygotic and dizygotic twins concordant or discordant for AD and control pairs from the Vietnam Era Twin Registry were assessed, as were the offspring of these twins and the mothers of these offspring. Interventions: Structured psychiatric interviews. Main Outcome Measures: Participants' psychiatric, alcohol abuse (AA), and AD histories (DSM-IV). Results: Offspring of monozygotic and dizygotic twins with a history of AD were significantly more likely to exhibit AA or AD than were offspring of nonalcoholic fathers. Offspring of an alcohol-abusing monozygotic twin whose co-twin was AD were also more likely to exhibit AD than were offspring of nonalcoholic twins. In contrast, offspring of an unaffected (ie, no history of abuse or dependence) monozygotic twin whose co-twin was AD were no more likely to exhibit AA or AD than were offspring of nonalcoholic twins. Conclusions: These findings support the hypothesis that family environmental effects do make a difference in accounting for offspring outcomes, in particular, that a low-risk environment (ie, the absence of parental alcoholism) can moderate the impact of high genetic risk regarding offspring for the development of alcohol-use disorders.