Fatty acid amide hydrolase (FAAH) terminates the endocannabinoid signaling pathway that regulates numerous neurobehavioral processes in animals by hydrolyzing a class of lipid mediators, N-acylethanolamines (NAEs). Recent identification of an Arabidopsis FAAH homologue (AtFAAH) and several studies, especially those using AtFAAH overexpressing and knock-out lines suggest that a FAAH-mediated pathway exists in plants for the metabolism of endogenous NAEs. Here, I provide evidence to support this concept by identifying candidate FAAH cDNA sequences in diverse plant species. NAE amidohydrolase assays confirmed that several of the proteins encoded by these cDNAs indeed catalyzed the hydrolysis of NAEs in vitro. Kinetic parameters, inhibition properties, and substrate specificities of the plant FAAH enzymes were very similar to those of mammalian FAAH. Five amino acid residues determined to be important for catalysis by rat FAAH were absolutely conserved within the plant FAAH sequences. Site-directed mutation of each of the five putative catalytic residues in AtFAAH abolished its hydrolytic activity when expressed in Escherichia coli. Contrary to overexpression of native AtFAAH in Arabidopsis that results in enhanced seedling growth, and in seedlings that were insensitive to exogenous NAE, overexpression of the inactive AtFAAH mutants showed no growth enhancement and no NAE tolerance. However, both active and inactive AtFAAH overexpressors displayed hypersensitivity to ABA, suggesting a function of the enzyme independent of its catalytic activity toward NAE substrates. Yeast two-hybrid screening identified Arg/Ser-rich zinc knuckle-containing protein as a candidate protein that physically and domain-specifically interacts with AtFAAH and its T-DNA knock-out Arabidopsis was hypersensitive to ABA to a degree similar to AtFAAH overexpressors. Taken together, AtFAAH appears to have a bifurcating function, via NAE hydrolysis and protein-protein interaction, to control Arabidopsis growth and interaction with phytohormone signaling pathways. These studies help to functionally define the group of enzymes that metabolize NAEs in plants, and further will expand the knowledge-base of lipid metabolism and signaling for manipulation of various physiological processes important to plant growth and responses to environmental stress.