Marijuana is currently the most widely abused street drug. However, the functional significance of the cannabinoid receptor system in health and disease includes the use of cannabinoids as analgesics, antiemetics in cancer patients, anticonvulsants for epilepsy, and as antiglaucoma agents as well as immunomodulatory agents. Our knowledge of the mechanisms of action of cannabinoids has increased greatly in the past several years. Two cannabinoid receptors have been identified to date: one is located predominantly in the central nervous system (CBI), whereas the other is expressed in peripheral tissues (CB2). Both are members of the G-protein-coupled receptor family and couple to inhibition of adenylyl cyclase (as well as additional second messenger systems), in transfected cells expressing these receptors, and in the nervous system. An endogenous ligand has been isolated for the CBI receptor; it is arachidonic acid ethanolamide, or anandamide. Candidate endogenous ligands for the CB2 receptor have also been described. Another development is the discovery of a selective antagonist for the CBI receptor. The distribution of the cannabinoid receptor subtypes has been mapped by receptor autoradiography, RT-PCR and in situ hybridization. These new research tools will aid in the elucidation of the physiological role of the endogenous cannabinoid system.