A long-standing literature linking endocannabinoids (ECBs) to stress, fear, and anxiety has led to growing interest in developing novel anxiolytics targeting the ECB system. Following rapid on-demand biosynthesis and degradation upon neuronal activation, the ECB N-arachidonoylethanolamide (anandamide, AEA) is actively degraded by the serine hydrolase enzyme, fatty acid amide hydrolase (FAAH). Exposure to stress rapidly mobilizes FAAH to deplete the signaling pool of AEA and increase neuronal excitability in a key anxiety-mediating region – the basolateral amygdala (BLA). Gene deletion or pharmacological inhibition of FAAH prevents stress-induced reductions in AEA and associated increases in BLA dendritic hypertrophy and anxiety-like behavior. Additionally, inhibition of FAAH facilitates long-term fear extinction and rescues deficient fear extinction in rodent models by enhancing AEA–CB1 (cannabinoid type 1) receptor signaling and synaptic plasticity in the BLA. These preclinical findings propose restoring deficient BLA AEA levels by pharmacologically inhibiting FAAH as a mechanism to therapeutically mitigate the effects of traumatic stress.