Background. Substantial evidence exists for an important genetic contribution to alcohol dependence risk in women and men. It has been suggested that genetically determined differences in alcohol sensitivity may represent one pathway by which an increase in alcohol dependence risk occurs. Methods. Telephone interview follow-up data were obtained on twins from male, female and unlike-sex twin pairs who had participated in an alcohol challenge study in 1979-81, as well as other pairs from the same Australian twin panel surveyed by mail in 1980-82. Results. At follow-up, alcohol challenge men did not differ from other male twins from the same age cohort on measures of lifetime psychopathology or drinking habits; but alcohol challenge women were on average heavier drinkers than other women. A composite alcohol sensitivity measure, combining subjective intoxication and increase in body-sway after alcohol challenge in 1979-81, exhibited high heritability (60%). Parental alcoholism history was weakly associated with decreased alcohol sensitivity in women, but not after adjustment for baseline drinking history, or in men. High alcohol sensitivity in men was associated with substantially reduced alcohol dependence risk (OR = 0.05, 95% CI 0.01-0.39). Furthermore, significantly decreased (i.e. low) alcohol sensitivity was observed in non-alcoholic males whose MZ co-twin had a history of alcohol dependence, compared to other non-alcoholics. These associations remained significant in conservative analyses that controlled for respondents' alcohol consumption levels and alcohol problems in 1979-81. Conclusions. Men (but not women) at increased genetic risk of alcohol dependence (assessed by MZ co-twin's history of alcohol dependence) exhibited reduced alcohol sensitivity. Associations with parental alcoholism were inconsistent.