The levels of N-arachidonoylethanolamine (anandamide), an endogenous cannabinoid-receptor ligand, and a relevant molecule, N-arachidonoylphosphatidylethanolamine (N-arachidonoylPtdEtn), in rat brain were investigated using a newly developed sensitive analytical method. We found that rat brain contains small but significant amounts of these two types of N-arachidonoyl lipids (4.3 pmol/g tissue and 50.2 pmol/g tissue, respectively). Then, we investigated how N-arachidonoylethanolamine (anandamide) is produced in the brain. We found that anandamide can be formed enzymatically via two separate synthetic pathways in the brain: enzymatic condensation of free arachidonic acid and ethanolamine; and formation of N-arachidonoylPtdEtn from PtdEtn and arachidonic acid esterified at the 1-position of phosphatidyl-choline (PtdCho), and subsequent release of anandamide from N-arachidonoylPtdEtn through the action of a phosphodiesterase. We confirmed that rat brain contains both the enzyme activities and lipid substrates involved in these reactions. Several lines of evidence strongly suggest that the second pathway, rather than the first one, meets the requirements and conditions for the synthesis of various species of N-acylethanolamine including anandamide in the brain.