Glycine receptors (GlyRs) are transmitter-gated anion channels of the Cys-loop superfamily which mediate synaptic inhibition at spinal and selected supraspinal sites. Although they serve pivotal functions in motor control and sensory processing, they have yet to be exploited as drug targets partly because of hitherto limited possibilities for allosteric control. Endocannabinoids (ECs) have recently been characterized as direct allosteric GlyR modulators, but the underlying molecular sites have remained unknown. Here, we show that chemically neutral ECs (e.g. anandamide, AEA) are positive modulators of α₁, α₂ and α₃ GlyRs, whereas acidic ECs (e.g. N-arachidonoyl-glycine; NA-Gly) potentiate α₁ GlyRs but inhibit α₂ and α₃. This subunit-specificity allowed us to identify the underlying molecular sites through analysis of chimeric and mutant receptors. We found that alanine 52 in extracellular loop 2, glycine 254 in transmembrane (TM) region 2 and intracellular lysine 385 determine the positive modulation of α₁ GlyRs by NA-Gly. Successive substitution of non-conserved extracellular and TM residues in α₂ converted NA-Gly-mediated inhibition into potentiation. Conversely, mutation of the conserved lysine within the intracellular loop between TM3 and TM4 attenuated NA-Gly-mediated potentiation of α₁ GlyRs, without affecting inhibition of α₂ and α₃. Notably, this mutation reduced modulation by AEA of all three GlyRs. These results define molecular sites for allosteric control of GlyRs by ECs and reveal an unrecognized function for the TM3-4 intracellular loop in the allosteric modulation of Cys-loop ion channels. The identification of these sites may help to understand the physiological role of this modulation and facilitate the development of novel therapeutic approaches to diseases such as spasticity, startle disease and possibly chronic pain.