Endocannabinoids are fatty acid derivatives that have a variety of biological actions, most notably via activation of the cannabinoid receptors. These receptors are also targets for drugs derived from Cannabis sativa. In the nervous system, endocannabinoids act as neuromodulators that depress neurotransmitter release at the presynaptic terminal. In most instances of neural endocannabinoid signaling, the compounds appear to be released from the postsynaptic neuron to act on the presynaptic terminal in a "retrograde" manner. Several common mechanisms involved in postsynaptic endocannabinoid production and presynaptic depression produced via activation of the CB1 cannabinoid receptor have been identified. However, significant problems remain in defining the mechanisms underlying endocannabinoid production, release, and movement across the membrane. These issues are discussed in the present review.