Endocannabinoids are lipid molecules that serve as natural ligands for the cannabinoid receptors CB1 and CB2. They modulate a diverse set of physiological processes such as pain, cognition, appetite, and emotional states, and their levels and functions are tightly regulated by enzymatic biosynthesis and degradation. 2-Arachidonoylglycerol (2-AG) is the most abundant endocannabinoid in the brain and is believed to be hydrolyzed primarily by the serine hydrolase monoacylglycerol lipase (MAGL). Although 2-AG binds and activates cannabinoid receptors in vitro, when administered in vivo, it induces only transient cannabimimetic effects as a result of its rapid catabolism. Here we show using a mouse model with a targeted disruption of the MAGL gene that MAGL is the major modulator of 2-AG hydrolysis in vivo. Mice lacking MAGL exhibit dramatically reduced 2-AG hydrolase activity and highly elevated 2-AG levels in the nervous system. A lack of MAGL activity and subsequent long-term elevation of 2-AG levels lead to desensitization of brain CB1 receptors with a significant reduction of cannabimimetic effects of CB1 agonists. Also consistent with CB1 desensitization, MAGL-deficient mice do not show alterations in neuropathic and inflammatory pain sensitivity. These findings provide the first genetic in vivo evidence that MAGL is the major regulator of 2-AG levels and signaling and reveal a pivotal role for 2-AG in modulating CB1 receptor sensitization and endocannabinoid tone.