1. The anti-inflammatory activity of the endogenous fatty acid amide palmitoylethanolamide and its relationship to cyclo-oxygenase (COX) activity, nitric oxide (NO) and oxygen free radical production were investigated in the rat model of carrageenan-induced acute paw inflammation and compared with the nonsteroidal anti-inflammatory drug (NSAID) indomethacin. 2. Palmitoylethanolamide (1, 3, 5, 10 mg kg(-1); p.o.) and indomethacin (5 mg kg(-1); p.o.) were administered daily after the onset of inflammation for three days and the paw oedema was measured daily; 24 h after the last dose (fourth day) the rats were killed and the COX activity and the content of nitrite/nitrate (NO(2)(-)/NO(3)(-)), malondialdehyde (MDA), endothelial and inducible nitric oxide synthase (eNOS and iNOS) were evaluated in the paw tissues. 3. Palmitoylethanolamide had a curative effect on inflammation, inhibiting the carrageenan-induced oedema in a dose- and time-dependent manner. This effect was not reversed by the selective CB(2) receptor antagonist (N-[(1S)-endo-1,3,3-trimethylbicyclo[2.2.1]heptan-2yl]-5-(4-chloro-3-methylphenyl)-1-(4-methylbenzyl)pyrazole-3 carboxamide) (SR144528), 3 mg kg(-1) p.o. On the fourth day after carrageenan injection, COX activity and the level of NO(2)(-)/NO(3)(-), eNOS and MDA were increased in the inflamed paw, but iNOS was not present. Palmitoylethanolamide (10 mg kg(-1)) and indomethacin markedly reduced these increases. 4. Our findings show, for the first time, that palmitoylethanolamide has a curative effect in a model of acute inflammation. The inhibition of COX activity and of NO and free radical production at the site of inflammation might account for this activity.