The fatty-acid primary amide, oleamide, is a novel signaling molecule whose mechanism of biosynthesis is unknown. Recently, the N(18)TG(2) cell line was shown to synthesize oleamide from oleic acid, thereby demonstrating that these cells contain the necessary catalytic activities for generating the fatty-acid primary amide. The ability of peptide alpha-amidating enzyme, peptidylglycine-alpha-amidating monooxygenase (PAM; EC 1.14.17.3), to catalyze the formation of oleamide from oleoylglycine in vitro suggests this as a function for the enzyme in vivo. This investigation shows that N(18)TG(2) cells, in fact, express PAM and that cellular differentiation dramatically increases this expression PAM expression was confirmed by the detection of PAM mRNA, PAM protein, and enzymatic activity that exhibits the functional characteristics of PAM isolated from mammalian neuroendocrine tissues. The regulated expression of PAM in N(18)TG(2) cells is consistent with the proposed role of PAM in the biosynthesis of fatty-acid primary amides and further establishes this cell line as a model for studying the pathway.