Palmitoylethanolamide (PEA), the naturally occurring amide of palmitic acid and ethanolamine, reduces pain and inflammation through an as-yet-uncharacterized mechanism. Here, we identify the nuclear receptor peroxisome proliferator-activated receptor-α (PPAR-α) as the molecular target responsible for the anti-inflammatory properties of PEA. PEA selectively activates PPAR-α in vitro with an EC₅₀ value of 3.1 ± 0.4 μM and induces the expression of PPAR-α mRNA when applied topically to mouse skin. In two animal models, carrageenan-induced paw edema and phorbol ester-induced ear edema, PEA attenuates inflammation in wild-type mice but has no effect in mice deficient in PPAR-α. The natural PPAR-α agonist oleoylethanolamide (OEA) and the synthetic PPAR-α agonists GW7647 and Wy-14643 mimic these effects in a PPAR-α–dependent manner. These findings indicate that PPAR-α mediates the anti-inflammatory effects of PEA and suggest that this fatty-acid ethanolamide may serve, like its analog OEA, as an endogenous ligand of PPAR-α.