Palmitoylethanolamide (PEA) is marketed as a “dietary food for special medical purposes”. Its broad-spectrum analgesic, anti-inflammatory, and neuroprotective effects make PEA an interesting substance in pain management. However, the underlying analgetic mechanisms have not yet been investigated in humans. The aim of our study is to provide a deeper understanding of the involved mechanisms, which is essential for differentiating therapeutic approaches and the establishment of mechanism-based therapeutic approaches. In this randomized, placebo-controlled, double-blinded crossover trial, 14 healthy volunteers were included. PEA (3 × 400 mg per day) or placebo were taken for 4 weeks. Our study investigated the mode of action of PEA using an established pain model, “Repetitive phasic heat application”, which is well-suited to investigate analgesic and anti-hyperalgesic effects in healthy volunteers. Parameters for peripheral and central sensitization as well as for pain modulation were assessed. Repetitive heat pain was significantly decreased, and the cold pain tolerance was significantly prolonged after the PEA treatment. The pressure pain tolerance and the conditioned pain modulation were increased after the PEA treatment. The wind-up ratio and the average distance of allodynia were significantly decreased after the PEA treatment. The heat pain tolerance was significantly higher after the PEA treatment. The present study has demonstrated that PEA has clinically relevant analgesic properties, acting on both peripheral and central mechanisms as well as in pain modulation.