The endocannabinoid 2-arachidonoyl-sn-glycerol (2-AG), a key modulator of synaptic transmission in mammalian brain, is produced in dendritic spines and then crosses the synaptic junction to depress neurotransmitter release. Here we report that 2-AG-dependent retrograde signaling also mediates an enduring enhancement of glutamate release, as assessed with independent tests, in the lateral perforant path (LPP), one of two cortical inputs to the granule cells of the dentate gyrus. Induction of this form of long-term potentiation (LTP) involved two types of glutamate receptors, changes in postsynaptic calcium, and the postsynaptic enzyme that synthesizes 2-AG. Stochastic optical reconstruction microscopy confirmed that CB1 cannabinoid receptors are localized presynaptically to LPP terminals, while the inhibition or knockout of the receptors eliminated LPP-LTP. Suppressing the enzyme that degrades 2-AG dramatically enhanced LPP potentiation, while overexpressing it produced the opposite effect. Priming with a CB1 agonist markedly reduced the threshold for LTP. Latrunculin A, which prevents actin polymerization, blocked LPP-LTP when applied extracellularly but had no effect when infused postsynaptically into granule cells, indicating that critical actin remodeling resides in the presynaptic compartment. Importantly, there was no evidence for the LPP form of potentiation in the Schaffer-commissural innervation of field CA1 or in the medial perforant path. Peripheral injections of compounds that block or enhance LPP-LTP had corresponding effects on the formation of long-term memory for cues conveyed to the dentate gyrus by the LPP. Together, these results indicate that the encoding of information carried by a principal hippocampal afferent involves an unusual, regionally differentiated form of plasticity.