The alcohol ignition interlock system and method has a transdermal blood alcohol concentration blood alcohol concentration reader in combination with a vehicle ignition interlock circuit that prevents an intoxicated person from operating a vehicle. The blood alcohol concentration reader utilizes a sensor that continuously measures very low levels of transdermal alcohol mounted on the steering wheel of the vehicle beneath a porous cover. The readings are communicated to a microprocessor-controlled control unit and ignition interlock circuitry that either enables or disables start-up of the vehicle, as well as continued operation thereof. Not only does the system prevent an intoxicated person from starting the vehicle, but should the system detect the driver's subsequent intoxicated state while in operation of the vehicle, the driver is given a period of time and distance in which to pull off the road prior to the ignition system being disabled.