THC-like psychoactive cannabinoids permeate the lipid bilayer of the membrane, altering its physicochemical properties and activating phospholipases. As a result, an increased production of arachidonic acid occurs with its cascade of eicosanoids, including prostaglandins. In addition, THC and its psychoactive derivatives bind within the membrane in a stereospecific fashion, to a transmembrane G protein coupled receptor (GPCR) for which THC has a much higher affinity than the natural ligands, arachidonylethanolamide (AEA) and 2-arachidonyglycerol (2-AG). These natural lipid ligands may be considered signaling molecules which are generated in the membrane lipid bilayer. THC alters the physicochemical disposition of the lipid bilayer and interacts with the integral membrane protein receptors through alteration of the boundary lipid. This effect is distinct from the mechanism resulting from its persistent binding to a G protein coupled transmembrane receptor. THC does not interact directly with neurotransmitter receptors but alters their pharmacological response in an allosteric fashion. It is proposed that the binding of AEA and 2-AG to the G protein coupled transmembrane receptor possesses a physiological function which is to regulate the signaling between boundary lipids and membrane receptors in response to extracellular signals. AEA and 2-AG are eicosanoid signaling molecules which modulate the activity of G protein coupled transmembrane receptors. AEA and 2-AG should not be identified with synthetic ligand molecules dubbed 'endogenous cannabinoids' which are 'xenobiotics' with no physiological regulating function. THC deregulates persistently a basic signaling mechanism of the membrane lipid bilayer and of its integrated receptors with resulting impairment of cellular function of brain, heart and male gonads. Copyright 2000 John Wiley & Sons, Ltd.