We previously demonstrated that paracetamol has to be metabolised in the brain by fatty acid amide hydrolase enzyme into AM404 (N-(4-hydroxyphenyl)-5Z,8Z,11Z,14Z-eicosatetraenamide) to activate CB receptors and TRPV1 channels, which mediate its analgesic effect. However, the brain mechanisms supporting paracetamol-induced analgesia remain unknown.The effects of paracetamol on brain function in Sprague-Dawley rats were determined by functional MRI. Levels of neurotransmitters in the periaqueductal grey (PAG) were measured using in vivo H-NMR and microdialysis. Analgesic effects of paracetamol were assessed by behavioural tests and challenged with different inhibitors, administered systemically or microinjected in the PAG.Paracetamol decreased the connectivity of major brain structures involved in pain processing (insula, somatosensory cortex, amygdala, hypothalamus, and the PAG). This effect was particularly prominent in the PAG, where paracetamol, after conversion to AM404, (a) modulated neuronal activity and functional connectivity, (b) promoted GABA and glutamate release, and (c) activated a TRPV1 channel-mGlu receptor-PLC-DAGL-CB receptor signalling cascade to exert its analgesic effects.The elucidation of the mechanism of action of paracetamol as an analgesic paves the way for pharmacological innovations to improve the pharmacopoeia of analgesic agents.