The discovery that botanical cannabinoids such as delta-9 tetrahydrocannabinol exert some of their effect through binding specific cannabinoid receptor sites has led to the discovery of an endocannabinoid signaling system, which in turn has spurred research into the mechanisms of action and addiction potential of cannabis on the one hand, while opening the possibility of developing novel therapeutic agents on the other. This paper reviews current understanding of CB1, CB2, and other possible cannabinoid receptors, their arachidonic acid derived ligands (e.g. anandamide; 2 arachidonoyl glycerol), and their possible physiological roles. CB1 is heavily represented in the central nervous system, but is found in other tissues as well; CB2 tends to be localized to immune cells. Activation of the endocannabinoid system can result in enhanced or dampened activity in various neural circuits depending on their own state of activation. This suggests that one function of the endocannabinoid system may be to maintain steady state. The therapeutic action of botanical cannabis or of synthetic molecules that are agonists, antagonists, or which may otherwise modify endocannabinoid metabolism and activity indicates they may have promise as neuroprotectants, and may be of value in the treatment of certain types of pain, epilepsy, spasticity, eating disorders, inflammation, and possibly blood pressure control.