Cyclooxygenase-2 (COX-2), a rate-limiting enzyme converting arachidonic acid to prostaglandins and a key player in neuroinflammation, has been implicated in the pathogenesis of neurodegenerative diseases such as multiple sclerosis, Parkinsons and Alzheimers diseases, and in traumatic brain injury- and ischemia-induced neuronal damage, and epileptogenesis. Accumulated information suggests that the contribution of COX-2 to neuropathology is associated with its involvement in synaptic modification. Inhibition or elevation of COX-2 has been shown to suppress or enhance excitatory glutamatergic neurotransmission and long-term potentiation (LTP). These events are mainly mediated via PGE2, the predominant reaction product of COX-2, and the PGE2 subtype 2 receptor (EP2)-protein kinase A pathway. Recent evidence shows that endogenous cannabinoids are substrates for COX-2 and can be oxygenated by COX-2 to form new classes of prostaglandins (prostaglandin glycerol esters and prostaglandin ethanolamides). These COX-2 oxidative metabolites of endocannabinoids, as novel signaling mediators, modulate synaptic transmission and plasticity and cause neurodegeneration. The actions of these COX-2 metabolites are likely mediated by mitogen-activated protein kinase (MAPK) and inositol 1,4,5-trisphosphate (IP3) signal transduction pathways. These discoveries suggest that the contributions of COX-2 to neurotransmission and brain malfunction result not only from its conversion of arachidonic acid to classic prostaglandins but also from its oxidative metabolism of endocannabinoids to novel prostaglandins. Thus, elucidation of COX-2 in synaptic signaling may provide a mechanistic basis for designing new drugs aimed at preventing, treating or alleviating neuroinflammation-associated neurological disorders.