The strike, 17 minutes from the end, came after both sides blew a hatful of glaring chances, after a frenetic tussle.
It was Alloa’s fourth successive win, a club record in the second tier. In contrast Queens have just one win in their last 12 games.
The first good chance fell to Alloa when Andy Graham flicked on an Iain Flannigan corner, but Dario Zanatta scooped the ball over the bar.
In 19 minutes Liam Dick swung over a cross for Jack Aitchison, which was saved by goalkeeper Jack Leighfield and the follow-up by Kevin Cawley was bundled off the line as Alloa continued to press.
Queens passed up an opportunity in 34 minutes after a defensive blunder from Graham let Lydon Dykes in, but goalkeeper Neil Parry blocked his effort. Two minutes later Parry produced a superb double save from Dykes and then Scott Mercer.
Alloa carved out a great chance in 65 minutes by substitute Jim Hamilton but Leighfield got down sharply to save, before Hetherington’s bizarre strike.