Palmitoylethanolamide (PEA, N-hexadecanoylethanolamide) is an endogenous compound belonging to the family of N-acylethanolamines. PEA has anti-inflammatory and analgesic properties and is very well tolerated in humans. In the present article, the basal pharmacology of PEA is reviewed. In terms of its pharmacokinetic properties, most work has been undertaken upon designing formulations for its absorption and upon characterising the enzymes involved in its metabolism, but little is known about its bioavailability, tissue distribution, and excretion pathways. PEA exerts most of its biological effects in the body secondary to the activation of peroxisome proliferator-activated receptor-alpha (PPAR-alpha), but PPAR-alpha-independent pathways involving other receptors (Transient Receptor Potential Vanilloid 1 (TRPV1), GPR55) have also been identified. Given the potential clinical utility of PEA, not least for the treatment of pain where there is a clear need for new well-tolerated drugs, we conclude that the gaps in our knowledge, in particular those relating to the pharmacokinetic properties of the compound, need to be filled.