The membrane-associated enzyme NAPE-PLD (N-acyl phosphatidylethanolamine specific-phospholipase D) generates the endogenous cannabinoid arachidonylethanolamide and other lipid signaling amides, including oleoylethanolamide and palmitoylethanolamide. These bioactive molecules play important roles in several physiological pathways including stress and pain response, appetite, and lifespan. Recently, we reported the crystal structure of human NAPE-PLD and discovered specific binding sites for the bile acid deoxycholic acid. In this study, we demonstrate that in the presence of this secondary bile acid, the stiffness of the protein measured by elastic neutron scattering increases, and NAPE-PLD is ∼7 times faster to catalyze the hydrolysis of the more unsaturated substrate N-arachidonyl-phosphatidylethanolamine, compared with N-palmitoyl-phosphatidylethanolamine. Chenodeoxycholic acid and glyco- or tauro-dihydroxy conjugates can also bind to NAPE-PLD and drive its activation. The only natural monohydroxy bile acid, lithocholic acid, shows an affinity of ∼20 μM and acts instead as a reversible inhibitor (IC50 ≈ 68 μM). Overall, these findings provide important insights into the allosteric regulation of the enzyme mediated by bile acid cofactors and reveal that NAPE-PLD responds primarily to the number and position of their hydroxyl groups.