In this study, we demonstrate that killer cell lectin-like receptor subfamily G member 1 (KLRG1), a transmembrane protein preferentially expressed on T cells, is highly expressed on CD56 ؉ NK cells, which are significantly reduced in their numbers and functions in the peripheral blood of patients with chronic hepatitis C virus (HCV) infection compared to subjects without infection. KLRG1 expression is also upregulated on healthy NK cells exposed to Huh-7 hepatocytes infected with HCV in vitro. Importantly, the expression levels of KLRG1 are inversely associated with the capacity of NK cells to proliferate and to produce gamma interferon (IFN-␥) but positively associated with apoptosis of NK cells in response to inflammatory cytokine stimulation. KLRG1؉ NK cells, including CD56 bright and CD56 dim subsets, exhibit impaired cell activation and IFN-␥ production but increased apoptosis compared to KLRG1؊ NK cells, particularly in HCV-infected individuals. Importantly, blockade of KLRG1 signaling significantly recovered the impaired IFN-␥ production by NK cells from HCV-infected subjects. Blockade of KLRG1 also enhanced the impaired phosphorylation of Akt (Ser473) in NK cells from HCV-infected subjects. Taken together, these results indicate that KLRG1 negatively regulates NK cell numbers and functions via the Akt pathway, thus providing a novel marker and therapeutic target for HCV infection.