Natural killer (NK) cells have crucial roles in tumor surveillance. We found that tumor-infiltrating NK cells in human liver cancers had small, fragmented mitochondria in their cytoplasm, whereas liver NK cells outside tumors, as well as peripheral NK cells, had normal large, tubular mitochondria. This fragmentation was correlated with reduced cytotoxicity and NK cell loss, resulting in tumor evasion of NK cell-mediated surveillance, which predicted poor survival in patients with liver cancer. The hypoxic tumor microenvironment drove the sustained activation of mechanistic target of rapamycin-GTPase dynamin-related protein 1 (mTOR-Drp1) in NK cells, resulting in excessive mitochondrial fission into fragments. Inhibition of mitochondrial fragmentation improved mitochondrial metabolism, survival and the antitumor capacity of NK cells. These data reveal a mechanism of immune escape that might be targetable and could invigorate NK cell-based cancer treatments.