Long-chain N-acylethanolamines (NAEs) and their precursors, N-acylethanolamine phospholipids, are ubiquitous trace constituents of animal and human cells, tissues and body fluids. Their cellular levels appear to be tightly regulated and they accumulate as the result of injury. Saturated and monounsaturated congeners which represent the vast majority of cellular NAEs can have cytoprotective effects while polyunsaturated NAEs, especially 20:4n-6 NAE (anandamide), elicit physiological effects by binding to and activating cannabinoid receptors. It is the purpose of this article to review published data on the pathways and mechanisms of NAE biosynthesis in mammals and to evaluate this information for its physiological significance. The generation and turnover of NAE via N-acyl PE through the transacylation-phosphodiesterase pathway may represent a novel cannabinoid receptor-independent signalling system, analogous to and possibly related to ceramide-mediated cell signalling.