NK cells are important for the clearance of tumors, parasites, and virus-infected cells. Thus, factors that control NK cell numbers and function are critical for the innate immune response. A subset of NK cells express the inhibitory killer cell lectin-like receptor G1 (KLRG1). In this study, we identify that KLRG1 expression is acquired during periods of NK cell division such as development and homeostatic proliferation. KLRG1+ NK cells are mature in phenotype, and we show for the first time that these cells have a slower in vivo turnover rate, reduced proliferative response to IL-15, and poorer homeostatic expansion potential compared with mature NK cells lacking KLRG1. Transfer into lymphopenic recipients indicate that KLRG1− NK cells are precursors of KLRG1+ NK cells and KLRG1 expression accumulates following cell division. Furthermore, KLRG1+ NK cells represent a significantly greater proportion of NK cells in mice with enhanced NK cell numbers such as Cd45−/− mice. These data indicate that NK cells acquire KLRG1 on their surface during development, and this expression correlates with functional distinctions from other peripheral NK cells in vivo.