Neil Reagan, a retired advertising executive and radio and television director who was most notably known as President Ronald Reagan's older brother, died on Wednesday at Scripps Memorial Hospital in San Diego. He was 88 and lived in Rancho Santa Fe, Calif.

The cause was heart failure, the President and his wife, Nancy, said yesterday in a statement.

Mr. Reagan was known as Moon to many family members and friends, a nickname derived from the ''Moon Mullins'' comic strip character while Mr. Reagan was on the football team in high school. He was a spirited, easy-going man with a whimsical sense of humor.

Before retiring in 1973 as a senior vice president of the McCann-Erickson advertising agency, he spent more than 40 years in advertising and the broadcast industry. He was, among other things, a director of the hit radio series, ''Dr. Christian,'' with Jean Hersholt, for nearly 20 years. He also directed his brother in the television series ''Death Valley Days.''

After Ronald Reagan moved to Hollywood and moved his parents to California from Illinois, he encouraged Neil and his wife, Bess, to follow. Neil Reagan's first job in California was as an announcer at KFWB radio. He then went to work for CBS and from there to McCann-Erickson, where he became senior vice president and head of the Los Angeles office until his retirement. While with McCann-Erickson, he directed the ''Dr. Christian'' show.

Largely because of the prominence of President Jimmy Carter's brother, Billy, and of President Richard M. Nixon's brother, Donald, Neil Reagan received substantial attention from the news media when his brother took office. He took it all in stride, referring to President Reagan mostly as Ronald and occasionally as Dutch.

He had a repertoire of good-natured responses to some of the inevitable questions after his brother's inauguration. ''No,'' he said, ''there isn't to be any Moonie beer.''

Once, with a grin, he flashed a dollar bill that someone had given him on which George Washington's portrait had been replaced by a photo of his brother, who was three years his junior. ''I'll charge $1.50 for it,'' he said.

In addition to his wife and brother, Mr. Reagan is survived by five nieces and seven nephews.

J N Reagan