Fatty acid primary amides have recently been recognized as mammalian hormones [Cravatt et al. (1995) Science 268, 1506-1509]. The route to their biosynthesis is unknown. Many mammalian peptide hormones also possess a C-terminal alpha-amide moiety that arises from the posttranslational oxidative cleavage of a C-terminal glycine-extended precursor. The enzyme that catalyzes this reaction is peptidylglycine alpha-amidating enzyme, which is known to preferentially amidate peptide substrates containing a penultimate, hydrophobic amino acid [Tamburini et al. (1990) Int. J. Pept. Protein Res. 35, 153-156]. We show that N-myristoylglycine is a substrate for peptidylglycine alpha-amidating enzyme with a (V/K)app that is 55 +/- 4% of the value measured for D-Tyr-Val-Gly. N-Fatty acylglycines are enzymatically produced in mammals from fatty acyl-coenzyme A (CoAs) and glycine by acyl-CoA:glycine N-acyltransferase. The sequential actions of acyl-CoA:glycine N-acyltransferase and peptidyl-glycine alpha-amidating enzyme would lead to the biosynthesis of fatty acid amides.