Anandamide (N-arachidonoylethanolamine) loses its cannabimimetic activity when it is hydrolyzed to arachidonic acid and ethanolamine by the catalysis of an enzyme referred to as anandamide amidohydrolase or fatty acid amide hydrolase. Cravatt's group and our group cloned cDNA of the enzyme from rat, human, mouse and pig, and the primary structures revealed that the enzymes belong to an amidase family characterized by the amidase signature sequence. The recombinant enzyme acted not only as an amidase for anandamide and oleamide, but also as an esterase for 2-arachidonoylglycerol. The reversibility of the enzymatic anandamide hydrolysis and synthesis was also confirmed with a purified recombinant enzyme. Several fatty acid derivatives like methyl arachidonyl fluorophosphonate potently inhibited the enzyme. The enzyme was distributed widely in mammalian organs such as liver, small intestine and brain. However, the anandamide hydrolyzing enzyme found in human megakaryoblastic cells was catalytically distinct from the previously known enzyme.