Natural killer (NK) cells are cytotoxic innate lymphoid cells that are involved in immune defense. NK cell reactivity is controlled in part by MHC class I recognition by inhibitory receptors, but the underlying molecular mechanisms remain undefined. Using a mouse model of conditional deletion in NK cells, we show here that the protein tyrosine phosphatase SHP-1 is essential for the inhibitory function of NK cell MHC class I receptors. In the absence of SHP-1, NK cells are hyporesponsive to tumour cells in vitro and their early Ca²⁺ signals are compromised. Mice without SHP-1 in NK cells are unable to reject MHC class I-deficient transplants and to control tumours in vivo. Thus, the inhibitory activity of SHP-1 is needed for setting the threshold of NK cell reactivity.