Endogenous neuromodulatory molecules are commonly coupled to specific metabolic enzymes to ensure rapid signal inactivation. Thus, acetylcholine is hydrolysed by acetylcholine esterase and tryptamine neurotransmitters like serotonin are degraded by monoamine oxidases. Previously, we reported the structure and sleep-inducing properties of cis-9-octadecenamide, a lipid isolated from the cerebrospinal fluid of sleep-deprived cats. cis-9-Octadecenamide, or oleamide, has since been shown to affect serotonergic systems and block gap-junction communication in glial cells (our unpublished results). We also identified a membrane-bound enzyme activity that hydrolyses oleamide to its inactive acid, oleic acid. We now report the mechanism-based isolation, cloning and expression of this enzyme activity, originally named oleamide hydrolase, from rat liver plasma membranes. We also show that oleamide hydrolase converts anandamide, a fatty-acid amide identified as the endogenous ligand for the cannabinoid receptor, to arachidonic acid, indicating that oleamide hydrolase may serve as the general inactivating enzyme for a growing family of bioactive signalling molecules, the fatty-acid amides. Therefore we will hereafter refer to oleamide hydrolase as fatty-acid amide hydrolase, in recognition of the plurality of fatty-acid amides that the enzyme can accept as substrates.