The development and function of natural killer (NK) cells is regulated by the interaction of inhibitory receptors of the Ly49 family with distinct peptide-laden major histocompatibility complex (MHC) class I molecules, although whether the Ly49 family is able bind to other MHC class I-like molecules is unclear. Here we found that the prototypic inhibitory receptor Ly49A bound the highly conserved nonclassical MHC class I molecule H2-M3 with an affinity similar to its affinity for H-2D(d). The specific recognition of H2-M3 by Ly49A regulated the 'licensing' of NK cells and mediated 'missing-self' recognition of H2-M3-deficient bone marrow. Host peptide-H2-M3 was required for optimal NK cell activity against experimental metastases and carcinogenesis. Thus, nonclassical MHC class I molecules can act as cognate ligands for Ly49 molecules. Our results provide insight into the various mechanisms that lead to NK cell tolerance.