Parkinson's disease (PD) is characterized by the selective loss of dopaminergic neurons in the substantia nigra and the accumulation of α-synuclein (α-Syn) aggregates. However, the molecular mechanisms regulating α-Syn aggregation and neuronal degeneration remain poorly understood. The peptidase M20 domain containing 1 (PM20D1) gene lies within the PARK16 locus genetically linked to PD. Single nucleotide polymorphisms regulating PM20D1 expression are associated with changed risk of PD. Dopamine (DA) metabolism and DA metabolites have been reported to regulate α-Syn pathology. Here we report that PM20D1 catalyzes the conversion of DA to N-arachidonoyl dopamine (NADA), which interacts with α-Syn and inhibits its aggregation. Simultaneously, NADA competes with α-Syn fibrils to regulate TRPV4-mediated calcium influx and downstream phosphatases, thus alleviating α-Syn phosphorylation. The expression of PM20D1 decreases during aging. Overexpression of PM20D1 or the administration of NADA in a mouse model of synucleinopathy alleviated α-Syn pathology, dopaminergic neurodegeneration, and motor impairments. These observations support the protective effect of the PM20D1-NADA pathway against the progression of α-Syn pathology in PD.