Oleamide is an endogenous sleep-inducing lipid that has been isolated from the cerebrospinal fluid of sleep-deprived mammals. Oleamide is the best-understood member of the primary fatty acid amide family. One key unanswered question regarding oleamide and all other primary acid amides is the pathway by which these molecules are produced. One proposed pathway involves oleoyl-CoA and N-oleoylglycine as intermediates: oleic acid --> oleoyl-CoA --> N-oleoylglycine --> oleamide. The first and third reactions are known reactions, catalyzed by acyl-CoA synthetase and peptidylglycine alpha-amidating monooxygenase (PAM). Oleoyl-CoA formation from oleic acid has been demonstrated in vitro and in vivo while, to date, N-oleoylglycine cleavage to oleamide has been established only in vitro. PAM catalyzes the final step in alpha-amidated peptide biosynthesis, and its proposed role in primary fatty acid amide biosynthesis has been controversial. Mouse neuroblastoma N(18)TG(2) cells are an excellent model system for the study of oleamide biosynthesis because these cells convert [(14)C]-oleic acid to [(14)C]-oleamide and express PAM in a regulated fashion. We report herein that growth of the N(18)TG(2) cells in the presence of [(14)C]-oleic acid under conditions known to stimulate PAM expression generates an increase in [(14)C]-oleamide or in the presence of a PAM inhibitor generates [(14)C]-N-oleoylglycine. This represents the first identification of N-oleoylglycine from a biological source. In addition, N(18)TG(2) cell growth in the presence of N-oleoylglycine yields oleamide. These results strongly indicate that N-oleoylglycine is an intermediate in oleamide biosynthesis and provide further evidence that PAM does have a role in primary fatty acid amide production in vivo.