N-Acylethanolamines (NAEs) are lipids involved in several physiological processes in animal and plant cells. In brain, NAEs are ligands of endocannabinoid receptors, which modulate various signaling pathways. In plant, NAEs regulate seed germination and root development, and they are involved in plant defense against pathogen attack. This signaling activity is started by an enzyme called N-acylphosphatidylethanolamine (NAPE) synthase. This catalyzes the N-acylation of phosphatidylethanolamine to form NAPE, which is most likely hydrolyzed by phospholipase D beta/gamma isoforms to generate NAE. This compound is further catabolized by fatty amide hydrolase. The genes encoding the enzymes involved in NAE metabolism are well characterized except for the NAPE synthase gene(s). By heterologous expression in Escherichia coli and overexpression in plants, we characterized an acyltransferase from Arabidopsis thaliana (At1g78690p) catalyzing the synthesis of lipids identified as NAPEs (two-dimensional TLC, phospholipase D hydrolysis assay, and electrospray ionization-tandem mass spectrometry analyses). The ability of free fatty acid and acyl-CoA to be used as acyl donor was compared in vitro with E. coli membranes and purified enzyme (obtained by immobilized metal ion affinity chromatography). In both cases, NAPE was synthesized only in the presence of acyl-CoA. beta-Glucuronidase promoter experiments revealed a strong expression in roots and young tissues of plants. Using yellow fluorescent protein fusion, we showed that the NAPE synthase is located in the plasmalemma of plant cells.