During the last decade, research on the molecular biology and genetics of cannabinoid receptors has led to a remarkable progress in understanding of the endogenous cannabinoid system, which functions in a plethora of physiological processes in the animal. At present, two types of cannabinoid receptors have been cloned from many vertebrates, and three endogenous ligands (the endocannabinoids arachidonoyl ethanolamide, 2-arachidonoyl glycerol and 2-arachidonoyl-glycerol ether) have been characterized. Cannabinoid receptor type 1 (CB(1)) is expressed predominantly in the central and peripheral nervous system, while cannabinoid receptor type 2 (CB(2)) is present almost exclusively in immune cells. Cannabinoid receptors have not yet been cloned from invertebrates, but binding proteins for endocannabinoids, endocannabinoids and metabolic enzyme activity have been described in a variety of invertebrates except for molting invertebrates such as Caenorhabditis elegans and Drosophila. In the central nervous system of mammals, there is strong evidence emerging that the CB(1) and its ligands comprise a neuromodulatory system functionally interacting with other neurotransmitter systems. Furthermore, the presynaptic localization of CB(1) together with the results obtained from electrophysiological experiments strengthen the notion that in cerebellum and hippocampus and possibly in other regions of the central nervous system, endocannabinoids may act as retrograde messengers to suppress neurotransmitter release at the presynaptic site. Many recent studies using genetically modified mouse lines which lack CB(1) and/or CB(2) finally could show the importance of cannabinoid receptors in animal physiology and will contribute to unravel the full complexity of the cannabinoid system.