Backgrounds Decreased cytotoxicity of natural killer (NK) cells has been shown in multiple myeloma (MM). However, the underlying molecular mechanisms remain unclear. Here, by using single‐cell RNA sequencing analysis and in vitro experiments, we aim to uncover and validate molecularly distinctive insights into identifying regulators for NK cell exhaustion and provide potential targets for novel immune therapies in MM. Methods Single‐cell RNA sequencing was conducted in the bone marrow and peripheral blood samples from 10 newly diagnosed MM patients and three healthy volunteers. Based on the cluster‐defining differentially expressed genes, we named and estimated functional states of each cluster via bioinformatics analyses. Functional significance of key findings obtained from sequencing analysis was examined in a series of in vitro experiments, including luciferase reporter assay, lentiviral expression vector construction, NK cell transfection, RT‐qPCR, flow cytometry, and cytotoxicity assay. Results We classified NK cells into seven distinct clusters and confirmed that a subset of ZNF683 + NK cells were enriched in MM patients with ‘exhausted’ transcriptomic profile, featuring as decreased expression of activating receptors and cytolytic molecules, as well as increased expression of inhibitory receptors. Next, we found a significant downregulation of SH2D1B gene that encodes EAT‐2, an adaptor protein of activating receptor SLAMF7, in ZNF683 + NK cells from MM patients versus healthy volunteers. We further proved that ZNF683 transfection in NK cells significantly downregulated SH2D1B expression via directly binding to the promoter of SH2D1B , leading to NK cell cytotoxic activity impairment and exhausted phenotypes acquisition. In contrast, ZNF683 knockout in NK cells from MM patients increased cytotoxic activity and reversed NK cell exhaustion. Conclusions In summary, our findings uncover an important mechanism of ZNF683 + NK cell exhaustion and suggest that transcriptional suppressor ZNF683 as a potential useful therapeutic target in immunotherapy of MM.