The endogenous cannabinoid system plays an important role in the regulation of gastrointestinal (GI) function in health and disease. Endocannabinoid levels are regulated by catabolic enzymes. Here, we describe the presence and localization of monoacylglycerol lipase (MGL), the major enzyme responsible for the degradation of 2-arachidonoylglycerol. We used molecular, biochemical, immunohistochemical and functional assays to characterize the distribution and activity of MGL. MGL mRNA was present in rat ileum throughout the wall of the gut. MGL protein was distributed in the muscle and mucosal layers of the ileum, and in the duodenum, proximal and distal colon. We observed MGL expression in nerve cell bodies and nerve fibres of the enteric nervous system. There was extensive colocalization of MGL with PGP 9.5 and calretinin immunoreactive neurons, but not with nitric oxide synthase. MGL was also present in the epithelium and highly expressed in the small intestine. Enzyme activity levels were highest in the duodenum and decreased along the gut with lowest levels in the distal colon. We observed both soluble and membrane-associated enzyme activities. The MGL inhibitor URB602 significantly inhibited whole gut transit in mice; an action that was abolished in cannabinoid 1 receptor-deficient mice. In conclusion, MGL is localized in the enteric nervous system where endocannabinoids regulate intestinal motility. MGL is highly expressed in the epithelium, where this enzyme may have digestive or other functions yet to be determined.