We report the cloning and functional characterization in the mouse and the rat of a novel natural killer (NK) cell receptor termed KLRE1. The receptor is a type 11 transmembrane protein with a COOH-terminal lectin-like domain, and constitutes a novel KLR family. Rat Klre1 was mapped to the NK gene complex. By Northern blot and flow cytometry using newly generated monoclonal antibodies, KLRE1 was shown to be expressed by NK cells and a subpopulation of CD3(+) cells, with pronounced interstrain variation. Western blot analysis indicated that KLRE1 can be expressed on the NK cell surface as a disulphide-linked dimer. The predicted proteins do not contain immunoreceptor tyrosine-based inhibitory motifs (ITIMs) or a positively charged amino acid in the transmembrane domain. However, in a redirected lysis assay, the presence of whole IgG, but not of F(ab')(2) fragments of a monoclonal anti-KLR-E1 antibody inhibited lysis of Fc-receptor bearing tumor target cells. Moreover, the tyrosine phosphatase SHP-1 was coimmunoprecipitated with KLRE1 from pervanadate-treated interleukin 2-activated NK cells. Together, our results indicate that KLRE1 may form a functional heterodimer with an as yet unidentified ITIM-bearing partner that recruits SHP-1 to generate an inhibitory receptor complex.