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Cyclooxygenase-2 (COX-2) oxygenates arachidonic acid (AA) and its ester analog, 2-arachidonoylglycerol (2-AG), to prostaglandins (PGs) and prostaglandin glyceryl esters (PG-Gs), respectively. Although the efficiency of oxygenation of these substrates by COX-2 in vitro is similar, cellular biosynthesis of PGs far exceeds that of PG-Gs. Evidence that the COX enzymes are functional heterodimers suggests that competitive interaction of AA and 2-AG at the allosteric site of COX-2 might result in differential regulation of the oxygenation of the two substrates when both are present. Modulation of AA levels in RAW264.7 macrophages uncovered an inverse correlation between cellular AA levels and PG-G biosynthesis. In vitro kinetic analysis using purified protein demonstrated that the inhibition of 2-AG oxygenation by high concentrations of AA far exceeded the inhibition of AA oxygenation by high concentrations of 2-AG. An unbiased systems-based mechanistic model of the kinetic data revealed that binding of AA or 2-AG at the allosteric site of COX-2 results in a decreased catalytic efficiency of the enzyme toward 2-AG, whereas 2-AG binding at the allosteric site increases COX-2's efficiency toward AA. The results suggest that substrates interact with COX-2 via multiple potential complexes involving binding to both the catalytic and allosteric sites. Competition between AA and 2-AG for these sites, combined with differential allosteric modulation, gives rise to a complex interplay between the substrates, leading to preferential oxygenation of AA.