Endogenous cannabinoids (endocannabinoids) mediate retrograde signals for short- and long-term suppression of transmitter release at synapses of striatal medium spiny ( MS) neurons. An endocannabinoid, 2-arachidonoyl-glycerol (2-AG), is synthesized from diacylglycerol (DAG) after membrane depolarization and Gq-coupled receptor activation. To understand 2-AG-mediated retrograde signaling in the striatum, we determined precise subcellular distributions of the synthetic enzyme of 2-AG, DAG lipase-alpha(DAGL alpha), and its upstream metabotropic glutamate receptor 5 (mGluR5) and muscarinic acetylcholine receptor 1 (M-1). DAGL alpha, mGluR5, and M-1 were all richly distributed on the somatodendritic surface of MS neurons, but their subcellular distributions were different. Although mGluR5 and DAGL alpha levels were highest in spines and accumulated in the perisynaptic region, M-1 level was lowest in spines and was rather excluded from the mGluR5-rich perisynaptic region. These subcellular arrangements suggest that mGluR5 and M-1 might differentially affect endocannabinoid-mediated, depolarization-induced suppression of inhibition (DSI) and depolarization-induced suppression of excitation (DSE) in MS neurons. Indeed, mGluR5 activation enhanced both DSI and DSE, whereas M-1 activation enhanced DSI only. Importantly, DSI, DSE, and receptor-driven endocannabinoid-mediated suppression were all abolished by the DAG lipase inhibitor tetrahydrolipstatin, indicating 2-AG as the major endocannabinoid mediating retrograde suppression at excitatory and inhibitory synapses of MS neurons. Accordingly, CB1 cannabinoid receptor, the main target of 2-AG, was present at high levels on GABAergic axon terminals of MS neurons and parvalbumin-positive interneurons and at low levels on excitatory corticostriatal afferents. Thus, endocannabinoid signaling molecules are arranged to modulate the excitability of the MS neuron effectively depending on cortical activity and cholinergic tone as measured by mGluR5 and M-1 receptors, respectively.