Endocannabinoids (eCBs) are important endogenous lipid mediators in synaptic transmission and plasticity and are oxygenated by cyclooxygenase-2 (COX-2) to form new types of prostaglandins. However, little is known about whether COX-2 oxidative metabolism of eCBs and their metabolites alter synaptic signaling. Here we demonstrate that increased COX-2 expression significantly enhances basal synaptic transmission and augments long-term potentiation (LTP) in the mouse hippocampus. This augmentation was inhibited in the presence of a selective COX-2 inhibitor or with deletion of the COX-2 gene. The CB(1) receptor-mediated depolarization-induced suppression of inhibition (DSI) was diminished when COX-2 expression was increased either with lipopolysaccharide (LPS) stimulation or transgenic neuronal over-expression of COX-2. Conversely, DSI was potentiated when COX-2 activity was pharmacologically or genetically inhibited. Interestingly, COX-2 oxidative metabolites of eCBs elevated LTP, an effect opposite to that of their parent molecules 2-arachidonoylglycerol (2-AG) and arachidonoyl ethanolamide (AEA). In addition, the ERK/MAPK and IP(3) pathways were found to mediate PGE(2)-G-induced enhancement of LTP. Our results indicate that COX-2 oxidative metabolism of eCBs is an important signaling pathway in modulation of synaptic transmission and plasticity.