NK cells play a central role in mediating innate immune responses. Activation of NK cells results in cytotoxicity, cytokine, and chemokine secretions. In this study, we show that in mice with targeted deletion of phospholipase Cgamma (PLCgamma)2, one of the key signal transducers, there are profound effects on the development and terminal maturation of NK cells. Lack of PLCgamma2 significantly impaired the ability of lineage-committed NK precursor cells to acquire subset-specific Ly49 receptors and thereby terminal maturation of NK cells. Overexpression of isozyme, PLCgamma1, in PLCgamma2-deficient NK cells resulted in the successful Ly49 acquisition and terminal maturation of the NK cells; however, it could only partially rescue NKG2D-mediated cytotoxicity with no cytokine production. Furthermore, PLCgamma2-deficient NK cells failed to mediate antitumor cytotoxicity and inflammatory cytokine production, displaying a generalized hyporesponsiveness. Our results strongly demonstrate that PLCgamma1 and PLCgamma2 play nonredundant and obligatory roles in NK cell ontogeny and in its effector functions.