Marijuana affects brain function primarily by activating the G-protein-coupled cannabinoid receptor-1 (CB1), which is expressed throughout the brain at high levels. Two endogenous lipids, anandamide and 2-arachidonylglycerol (2-AG), have been identified as CB1 ligands. Depolarized hippocampal neurons rapidly release both anandamide and 2-AG in a Ca2+-dependent manner. In the hippocampus, CB1 is expressed mainly by GABA (gamma-aminobutyric acid)-mediated inhibitory interneurons, where CB1 clusters on the axon terminal. A synthetic CB1 agonist depresses GABA release from hippocampal slices. These findings indicate that the function of endogenous cannabinoids released by depolarized hippocampal neurons might be to downregulate GABA release. Here we show that the transient suppression of GABA-mediated transmission that follows depolarization of hippocampal pyramidal neurons is mediated by retrograde signalling through release of endogenous cannabinoids. Signalling by the endocannabinoid system thus represents a mechanism by which neurons can communicate backwards across synapses to modulate their inputs.