Killer immunoglobulin-like receptors (KIRs) play an essential role in the regulation of natural killer cell functions. KIR genes are highly polymorphic in nature, showing both haplotypic and allelic variations among people. We demonstrated in both in vitro and in vivo models a significant heterogeneity in function among different KIR2DL1 alleles, including their ability to inhibit YT-Indy cells from degranulation, interferon gamma production, and cytotoxicity against target cells expressing the HLA-Cw6 ligand. Subsequent experiments showed that the molecular determinant was an arginine residue at position 245 (R245) in its transmembrane domain that mechanistically affects both the efficiency of inhibitory signaling and durability of surface expression. Specifically, in comparison with R245-negative alleles, KIR2DL1 that included R245 recruited more Src-homology-2 domain-containing protein tyrosine phosphatase 2 and beta-arrestin 2, showed higher inhibition of lipid raft polarization at immune synapse, and had less down-regulation of cell-surface expression upon interaction with its ligand. Thus, our findings provide novel insights into the molecular determinant of KIR2DL1 and conceivably a fundamental understanding of KIR2DL1 allelic polymorphism in human disease susceptibility, transplant outcome, and donor selection.