Oleamide is an endogenous fatty acid primary amide that accumulates in the cerebrospinal fluid under conditions of sleep deprivation and induces physiological sleep in animals. A review covering its discovery, its implications, and the emerging biology surrounding its discovery is presented. Consistent with its role as a prototypical member of a new class of biological signaling molecules, enzymatic regulation of endogenous concentrations of oleamide have been characterized or proposed. Fatty acid amide hydrolase (FAAH) is an integral membrane protein that degrades oleamide and potent inhibitors with physiological sleep-inducing properties have been disclosed. The characterization, cloning, and neuronal distribution of FAAH have been detailed and the enzyme was found to possess the ability to hydrolyze a range of fatty acid amides including anandamide which serves as the endogenous ligand for the cannabinoid receptor. An additional endogenous substance with REM sleep-inducing properties, 2-octyl gamma-bromoacetoacetate, was characterized as a potent FAAH inhibitor. Oleamide has been shown to modulate serotonergic neurotransmission and inhibit intercellular gap junction communication and detailed studies of its well defined and selective structural features required for activity have been disclosed.