PEA is an endogenous fatty acid amide, and a member of the N-acetyl-ethanolamine family. Fatty acid amides are created from a combination of a fatty acid and an amine. Fatty acid amides are widely circulated in the body, and have a key role in biochemical signalling. Although PEA is an endogenous compound found throughout the human body, Palmitoylethanolamide can be found in foods too. The most common Palmitoylethanolamide food sources are milk and eggs. However, Palmitoylethanolamide is only present in these foods at trace amounts and does not promote significant PEA benefits.

Interestingly enough, hypersensitivity to pain is associated with a large decrease in PEA levels in the brain and spinal cord, areas directly and indirectly involved in helping the nervous system from potentially harmful stimuli. This seems to indicate that PEA may be vital in bodily responses to pain. PEA research discovered that Palmitoylethanolamide binds to the peroxisome proliferator-activated receptor (PPAR-α) in the nucleus of cells. This particular receptor is responsible for regulating gene networks linked to pain control.

Another element that makes Palmitoylethanolamide unique is that it also has an affinity for cannabinoid-like receptors GPR55 and GPR119. Yet, PEA has no affinity for the classic cannabinoid receptors CB1 and CB2, so PEA does not carry the psychoactivity typically seen in classic cannabinoids.