Natural killer (NK) cells play a pivotal role in the immune reaction during the bone marrow allograft rejection. Little is known, however, about the molecular mechanisms underlying the NK cell-mediated allograft recognition and rejection. In this report, we assessed the role of a recently identified NK receptor, killer cell lectinlike receptor 1 (KLRE-1), by generating knock-out mice. KLRE-1-deficient mice were born at an expected frequency and showed no aberrant phenotype on growth and lymphoid development. Nevertheless, KLRE-1-deficient cells showed a severely compromised allogeneic cytotoxic activity compared with the wild-type cells. Furthermore, allogeneic bone marrow transfer culminated in colony formation in the spleen of KLRE-1-deficient mice, whereas no colony formation was observed in wild-type recipient mice. These results demonstrate that KLRE-1 is a receptor mediating recognition and rejection of allogeneic target cells in the host immune system.