Fatty acid amides (FAAs) represent a growing family of biologically active lipids implicated in a diverse range of cellular and physiological processes. At present, two general types of fatty acid amides, the N-acylethanolamines (NAEs) and the fatty acid primary amides (FAPAs), have been identified as potential physiological neuromodulators/neurotransmitters in mammals. Representative members of these two subfamilies include the endocannabinoid NAE anandamide and the sleep-inducing FAPA oleamide. In this Chapter, molecular mechanisms proposed for the biosynthesis and inactivation of FAAs are critically evaluated, with an emphasis placed on the biochemical and cell biological properties of proteins thought to mediate these processes.