“Alcohol,” the term, refers to a group of organic compounds with a vast range of forms and uses, in cosmetics and in other areas. For skin, there are good alcohols and bad alcohols, corresponding roughly to high-molecular-weight alcohols and low-molecular-weight alcohols, respectively, as we explain below. When fats and oils are chemically reduced, they become less-dense fatty alcohols (like cetyl alcohol), which can have emollient properties or act as detergent cleansing agents. There also are benign forms, including glycols, which are used as humectants to help deliver ingredients into skin.
Alcohols with low molecular weights—the bad-for-skin alcohols—can be drying and irritating. The alcohols to be concerned about in skincare products are ethanol or ethyl alcohol, denatured alcohol, methanol, isopropyl alcohol, SD alcohol, and benzyl alcohol (when one or more of these are listed among the main ingredients; tiny amounts aren’t a problem).
In addition to being drying and irritating, these alcohols can generate free-radical damage and disrupt skin’s protective barrier. Alcohol helps ingredients like retinol and vitamin C penetrate into the skin more effectively, but it does that by breaking down the skin's barrier—destroying the very substances that keep your skin healthy over the long term. 
Alcohol immediately harms the skin and starts a chain reaction of damage that continues long after it has evaporated. A 2003 study published in the Journal of Hospital Infection found that with regular exposure to alcohol-based products, cleansing becomes a damaging ordeal—skin is no longer able to keep water and cleansing agents from penetrating into it, thus further eroding the skin's barrier. 
There is actually a significant amount of research showing denatured alcohol (ethanol) causes free-radical damage in skin even at low levels. Small amounts of alcohol on skin cells in lab settings (about 3%, but keep in mind skincare products use amounts ranging from 5% to 60% or greater) over the course of two days increased cell death by 26%. It also destroyed the substances in cells that reduce inflammation and defend against free radicals, and actually caused more free-radical damage. 
If that weren’t bad enough, exposure to alcohol causes skin cells to self-destruct. The research also showed that these destructive, aging effects on skin cells increased the longer the exposure to alcohol; that is, two days of exposure was dramatically more harmful than one day, and that is only a 3% concentration. 
When alcohol ingredients are at the top of an ingredient list, they are problematic for all skin types; when they are near the bottom of an ingredient list, they aren’t present in a high enough concentration to be considered a problem for skin.
- Kwak S, Brief E, Langlais D, Kitson N, Lafleur M, Thewalt J. Ethanol perturbs lipid organization in models of stratum corneum membranes: An investigation combining differential scanning calorimetry; infrared and (2)H NMR spectroscopy. Biochim Biophys Acta. 2012;1818(5):1410-9.
- Kownatzki E. Hand hygiene and skin health.. J Hosp Infect.. 2003;55(4):239-45.
- Neuman M, Haber J, Malkiewicz I, Cameron R, Katz G, Shear N. Ethanol signals for apoptosis in cultured skin cells.. Alcohol. 2002;26(3):179-90.