Because of the prominent psychoactive effects of cannabis and its preparations, much research has focused on the actions of cannabinoids, the primary psychoactive components of cannabis, on neuronal function. A convergence of research has identified (1) cannabinoid receptors, (2) endogenous compounds that activate these receptors (endocannabinoids), and (3) drugs that interact with these receptors and the proteins that synthesize and degrade the endocannabinoids. This review will first consider how endogenous cannabinoids signal through cannabinoid receptors and the various forms of synaptic plasticity mediated by endocannabinoids. Next the interactions between exogenous cannabinoids such as Delta9-tetrahydrocannabinol and endocannabinoids and endocannabinoid-mediated plasticity will be examined. Finally, a model will be presented that can explain the prominent psychoactivity of these plant-derived cannabinoids.