Endocannabinoids (eCBs) function as retrograde signaling molecules at synapses throughout the brain, regulate axonal growth and guidance during development, and drive adult neurogenesis. There remains a lack of genetic evidence as to the identity of the enzyme(s) responsible for the synthesis of eCBs in the brain. Diacylglycerol lipase-alpha (DAGLalpha) and -beta (DAGLbeta) synthesize 2-arachidonoyl-glycerol (2-AG), the most abundant eCB in the brain. However, their respective contribution to this and to eCB signaling has not been tested. In the present study, we show approximately 80% reductions in 2-AG levels in the brain and spinal cord in DAGLalpha(-/-) mice and a 50% reduction in the brain in DAGLbeta(-/-) mice. In contrast, DAGLbeta plays a more important role than DAGLalpha in regulating 2-AG levels in the liver, with a 90% reduction seen in DAGLbeta(-/-) mice. Levels of arachidonic acid decrease in parallel with 2-AG, suggesting that DAGL activity controls the steady-state levels of both lipids. In the hippocampus, the postsynaptic release of an eCB results in the transient suppression of GABA-mediated transmission at inhibitory synapses; we now show that this form of synaptic plasticity is completely lost in DAGLalpha(-/-) animals and relatively unaffected in DAGLbeta(-/-) animals. Finally, we show that the control of adult neurogenesis in the hippocampus and subventricular zone is compromised in the DAGLalpha(-/-) and/or DAGLbeta(-/-) mice. These findings provide the first evidence that DAGLalpha is the major biosynthetic enzyme for 2-AG in the nervous system and reveal an essential role for this enzyme in regulating retrograde synaptic plasticity and adult neurogenesis.