Diacylglycerol (DAG) lipase activity is required for axonal growth during development and for retrograde synaptic signaling at mature synapses. This enzyme synthesizes the endocannabinoid 2-arachidonoyl-glycerol (2-AG), and the CB1 cannabinoid receptor is also required for the above responses. We now report on the cloning and enzymatic characterization of the first specific sn-1 DAG lipases. Two closely related genes have been identified and their expression in cells correlated with 2-AG biosynthesis and release. The expression of both enzymes changes from axonal tracts in the embryo to dendritic fields in the adult, and this correlates with the developmental change in requirement for 2-AG synthesis from the pre- to the postsynaptic compartment. This switch provides a possible explanation for a fundamental change in endocannabinoid function during brain development. Identification of these enzymes may offer new therapeutic opportunities for a wide range of disorders.