Natural killer cells in the mouse express class I MHC-specific inhibitory receptors of the Ly49 protein family. The receptors mediate inhibition of the lysis of tumor cells and normal cells, and mediate the specificity of bone-marrow graft rejection by NK cells in vivo. The function of these receptors may be to confer upon NK cells the capacity to distinguish normal self cells from cells that have down-regulated expression of some or all self-class I molecules. Ly49 receptors discriminate between different class I molecules, and are distributed in expression to overlapping subsets of NK cells. The receptors appear to interact with class I-MHC residues and associated N-glycans, with little or no discrimination of the class I-bound peptide. The Ly49 receptor repertoire may be initially generated by a stochastic process that distributes receptors randomly to different cells and treats the two alleles of a given Ly49 gene independently. However, class I-MHC-dependent "education" processes shape the functional repertoire. The education processes silence potentially auto-aggressive NK cells, probably by ensuring that each NK cell expresses at least one self-specific Ly49 receptor. In addition, NK cell clones that express multiple self-specific Ly49 receptors are disfavored by the education processes, perhaps to confer greater discrimination on to individual NK cells.