Natural killer (NK) cells are regulated by numerous stimulatory and inhibitory receptors that recognize various classes of cell surface ligands, some of which are expressed by normal healthy cells. We review two key issues in NK cell biology. How do NK cells achieve tolerance to healthy self-cells, despite great potential variability in inhibitory and stimulatory receptor engagement? How is the disease status of unhealthy cells translated into changes in ligand expression and consequent sensitivity to NK cell lysis? Concerning the second question, we review evidence that ligands for one key NK receptor, NKG2D, are induced by the DNA damage response, which is activated in cells exposed to genotoxic stress. Because cancer cells and some infected cells are subject to genotoxic stress, these findings suggest a new concept for how diseased cells are discriminated by the immune system. Second, we review studies that have overturned the prevalent notion that NK cells achieve self-tolerance by expressing inhibitory receptors specific for self-major histocompatibility complex class I molecules. A subset of NK cells lacks such receptors. These NK cells are hyporesponsive when stimulatory receptors are engaged, suggesting that alterations in signaling pathways that dampen stimulatory receptor signals contribute to self-tolerance of NK cells.