Rat testis was shown to contain significant amounts of both N-acylethanolamine, including N-arachidonoylethanolamine (anandamide), and N-acylphosphatidylethanolamine (N-acylPE), including N-arachidonoylPE. The fatty acid profiles of the N-acyl moieties of the two classes resembled each other. We confirmed that testis microsomes contain a phosphodiesterase activity catalyzing the release of anandamide from N-arachidonoylPE. They also contain an enzyme activity catalyzing the transfer of arachidonic acid from the 1-position of diacylphospholipids to PE to form N-arachidonoylPE. These results suggest that the N-acylPE pathway is important in the synthesis of anandamide in this tissue.