The NKR Ly49E has several unique characteristics. Unlike most NKRs, Ly49E is highly expressed on fetal NK cells, whereas expression is decreased on bone marrow-derived NK cells in adult mice. To investigate a possible role for Ly49E in NK cell differentiation and function, we have generated an Ly49E KO mouse. Our results show that bone marrow and splenic NK cells are present in normal numbers in Ly49E KO mice, expressing an unaltered panel of NKRs and differentiation markers. Furthermore, cytokine production and cytotoxicity by these cells are unaffected. Surprisingly, WT DX5(-) liver NK cells express high Ly49E levels in fetal and adult mice. Ly49E(+)DX5(-) liver NK cells transferred into Rag-2(-/-)/gc(-/-) mice maintain high Ly49E expression in the liver and differentiate into DX5(+) NK cells in spleen and bone marrow. Ly49E expression is not crucial for liver NK cell differentiation during ontogeny, as the DX5(-)/DX5(+) ratio, the NKR repertoire, and the granzyme B and TRAIL levels are comparable in Ly49E KO versus WT mice, except for lower TRAIL expression on DX5(-) liver NK cells in 20-day-old mice. The TRAIL-, perforin-, and FasL-mediated cytolysis by liver NK cells is unaffected in Ly49E KO mice. Collectively, we show that in addition to high Ly49E expression on fetal NK cells versus low Ly49E expression on conventional NK cells in adult life, Ly49E remains highly expressed on DX5(-) liver NK cells. However, Ly49E expression does not have a crucial role in differentiation and/or function of these NK cells.