Cannabis is not only a widely abused drug, but also has the potential for the development of useful agents for the treatment of emesis, anorexia and several neurological disorders. In this article we will review the biology of endogenous cannabinoid system and the effects of modulation of transmitter release by cannabinoids in the nervous system. During the past decade, two cannabinoid receptors, named CB1 and CB2, were identified. Putative endogenous ligands at these receptors were discovered as anandamide and 2-arachidonoylglycerol, and several research tools were identified, including receptor agonists and antagonists, antibodies, antisense oligodeoxynucleotides, and CB1 and CB2 receptor knockout mice. CB1 receptor is negatively coupled to adenylate cyclase and is either negatively or positively associated to ion channels. The localization of CB1 receptors justifies the effects of cannabinoids in the central nervous system, including the control of movement, memory impairment, analgesia and addiction. The main function of the endocannabinoid system is to regulate synaptic transmission in excitatory and inhibitory pathways in the brain. In this respect, it is relevant that the majority of cannabinoid receptors is located presynaptically on neurons where their activation causes the inhibition of the release of the respective neurotransmitter, an action that is shared in common with opioid receptors. CB1 receptor-mediated inhibition of transmitter release might explain the reinforcing properties and memory impairment caused by cannabinoids. Moreover, it may be relevant to the therapeutic potentials of cannabinoids.