The endogenous cannabinoid system is an ubiquitous lipid signalling system that appeared early in evolution and which has important regulatory functions throughout the body in all vertebrates. The main endocannabinoids (endogenous cannabis-like substances) are small molecules derived from arachidonic acid, anandamide (arachidonoylethanolamide) and 2-arachidonoylglycerol. They bind to a family of G-protein-coupled receptors, of which the cannabinoid CB(1) receptor is densely distributed in areas of the brain related to motor control, cognition, emotional responses, motivated behaviour and homeostasis. Outside the brain, the endocannabinoid system is one of the crucial modulators of the autonomic nervous system, the immune system and microcirculation. Endocannabinoids are released upon demand from lipid precursors in a receptor-dependent manner and serve as retrograde signalling messengers in GABAergic and glutamatergic synapses, as well as modulators of postsynaptic transmission, interacting with other neurotransmitters, including dopamine. Endocannabinoids are transported into cells by a specific uptake system and degraded by two well-characterized enzymes, the fatty acid amide hydrolase and the monoacylglycerol lipase. Recent pharmacological advances have led to the synthesis of cannabinoid receptor agonists and antagonists, anandamide uptake blockers and potent, selective inhibitors of endocannabinoid degradation. These new tools have enabled the study of the physiological roles played by the endocannabinoids and have opened up new strategies in the treatment of pain, obesity, neurological diseases including multiple sclerosis, emotional disturbances such as anxiety and other psychiatric disorders including drug addiction. Recent advances have specifically linked the endogenous cannabinoid system to alcoholism, and cannabinoid receptor antagonism now emerges as a promising therapeutic alternative for alcohol dependence and relapse.