Natural killer (NK) cells reject major histocompatibility complex class I (MHC-I)-deficient bone marrow through direct cytotoxicity but not solid organ transplants devoid of MHC-I. Here, we demonstrate an immediate switch in NK cell function upon exit from the circulation, characterized by a shift from direct cytotoxicity to chemokine/cytokine production. In the skin transplant paradigm, combining an NK cell-specific activating ligand, m157, with missing self MHC-I resulted in complete graft rejection, which was dependent on NK cells as potential helpers and T cells as effectors. Extracellular matrix proteins, collagen I, collagen III, and elastin, blocked NK cell cytotoxicity and promoted their chemokine/cytokine production. NK cell cytotoxicity against MHC-I-deficient melanoma in the skin was markedly increased by blocking tumor collagen deposition. MHC-I down-regulation occurred in solid human cancers but not leukemias, which could be directly targeted by circulating cytotoxic NK cells. Our findings uncover a fundamental mechanism that restricts direct NK cell cytotoxicity in peripheral tissues.