Anandamide (N-arachidonoylethanolamine) is the first discovered endocannabinoid (endogenous ligand of cannabinoid receptors). In animal tissues, anandamide is principally formed together with other bioactive long-chain N-acylethanolamines from membrane glycerophospholipid by two enzyme reactions. The first reaction is the transfer of a fatty acyl chain from the sn-1 position of glycerophospholipid to phosphatidylethanolamine by calcium-dependent N-acyltransferase, resulting in the generation of N-acylphosphatidylethanolamine (NAPE). The second reaction is catalyzed by a phosphodiesterase of the phospholipase D (PLD)-type, which releases N-acylethanolamines from their corresponding NAPEs. The produced N-acylethanolamines are hydrolyzed to fatty acids and ethanolamine by fatty acid amide hydrolase or an amidase acting exclusively at acidic pH. Our recent cDNA cloning of the NAPE-hydrolyzing PLD (NAPE-PLD) from mouse, rat and human revealed that NAPE-PLD is a novel enzyme which has no homology with any known PLD enzymes, but belongs to the zinc metallo-hydrolase family of the beta-lactamase fold. The recombinant enzyme hydrolyzed various NAPEs, including the anandamide precursor N-arachidonoylphosphatidylethanolamine at similar rates, but was inactive with phosphatidylcholine and phosphatidylethanolamine. Considering cannabimimetic activities of anandamide, the enzymes involved in the biosynthesis and degradation of anandamide, including NAPE-PLD, may be promising targets for therapeutic agents.