Natural killer (NK) cells represent an important component of the innate immune system. In ruminants there are few reports regarding presence or characterization of NK cells. Although absence of expression of major histocompatibility complex proteins on ovine trophoblast makes it potentially a target for NK cells, little is known about regulation of NK cells by products of pregnancy in sheep. Objectives of the present study were to determine whether cells with characteristics of NK cells exist in preparations of ovine peripheral blood lymphocytes (PBL) and endometrial epithelial cells (EEC) and to determine regulation of such cells by two pregnancy-associated molecules with immunoregulatory properties (ovine uterine serpin [OvUS] and interferon-tau [IFN-tau]). Ovine PBL and EEC lysed a putative NK target cell, the BHV-1 infected D17 cell, and lysis by both types of cells was neutralized by antibody against a molecule called function-associated molecule (FAM) expressed on NK cells of several species. Moreover, inhibitors that interfere with perforin-mediated lysis blocked NK-like activity of PBL. The NK-like lytic activity of PBL and EEC was inhibited by OvUS, whereas ovine and bovine IFN-tau significantly enhanced NK-like activity of PBL. In conclusion, NK-like activity present in preparations of ovine PBL and EEC is mediated by FAM(+) cells, is dependent on processes that involve perforin processing, and is regulated by OvUS and IFN-tau. Inhibition of NK-like activity of PBL and EEC by OvUS is consistent with a role for OvUS in protecting the conceptus from maternal cytotoxic lymphocytes. Stimulation of lysis by IFN-tau implies the existence of other inhibitory mechanisms during early pregnancy to prevent NK cell-mediated destruction of the conceptus.