Both exogenous and endogenous cannabinoids can allosterically modulate glycine receptors (GlyRs). However, little is known about the molecular basis of cannabinoid-GlyR interactions. Here we report that sustained incubation with the endocannabinoid anandamide (AEA) substantially increased the amplitude of glycine-activated current in both rat cultured spinal neurons and in HEK-293 cells expressing human α1, rat α2 and α3 GlyRs. While the α1 and α3 subunits were highly sensitive to AEA-induced potentiation, the α2 subunit was relatively insensitive to AEA. Switching a serine at 296 and 307 in the TM3 (transmembrane domain 3) of the α1 and α3 subunits with an alanine (A) at the equivalent position in the α2 subunit converted the α1/α3 AEA-sensitive receptors to sensitivity resembling that of α2. The S296 residue is also critical for exogenous cannabinoid-induced potentiation of I(Gly). The magnitude of AEA potentiation decreased with removal of either the hydroxyl or oxygen groups on AEA. While desoxy-AEA was significantly less efficacious in potentiating I(Gly), desoxy-AEA inhibited potentiation produced by both Δ(9)-tetrahydrocannabinol (THC), a major psychoactive component of marijuana, and AEA. Similarly, didesoxy-THC, a modified THC with removal of both hydroxyl/oxygen groups, did not affect I(Gly) when applied alone but inhibited the potentiation of I(Gly) induced by AEA and THC. These findings suggest that exogenous and endogenous cannabinoids potentiate GlyRs via a hydrogen bonding-like interaction. Such a specific interaction likely stems from a common molecular basis involving the S296 residue in the TM3 of the α1 and α3 subunits.