Catalyzes the hydrolysis of endogenous amidated lipids like the sleep-inducing lipid oleamide ((9Z)-octadecenamide), the endocannabinoid anandamide (N-(5Z,8Z,11Z,14Z-eicosatetraenoyl)- ethanolamine), as well as other fatty amides, to their corresponding fatty acids, thereby regulating the signaling functions of these molecules (PubMed:17015445, PubMed:19926788, PubMed:9122178). Hydrolyzes polyunsaturated substrate anandamide preferentially as compared to monounsaturated substrates (PubMed:17015445, PubMed:9122178). It can also catalyze the hydrolysis of the endocannabinoid 2-arachidonoylglycerol (2-(5Z,8Z,11Z,14Z- eicosatetraenoyl)-glycerol) (PubMed:21049984). FAAH cooperates with PM20D1 in the hydrolysis of amino acid-conjugated fatty acids such as N-fatty acyl glycine and N-fatty acyl-L-serine, thereby acting as a physiological regulator of specific subsets of intracellular, but not of extracellular, N-fatty acyl amino acids (By similarity). {ECO:0000250|UniProtKB:O08914, ECO:0000269|PubMed:17015445, ECO:0000269|PubMed:19926788, ECO:0000269|PubMed:21049984, ECO:0000269|PubMed:9122178}. This is the function of FAAH (fatty acid amide hydrolase, Ensembl gene identifier ENSG00000117480).