The natural killer group 2 membrane D (NKG2D) activating receptor plays crucial roles not only in host defense against tumors and viral infections, but also in autoimmune diseases. After NKG2D-mediated activation, Natural killer (NK) cells must be regulated to avoid potentially harmful reactivity. However, the negative regulation of these activated NK cells is poorly understood. Here, we reveal that the engagement of NKG2D by its ligand elicits not only target cell lysis, but also NK cell fratricide. Conventional mouse NK cells underwent cell death when cocultured with RMA cells expressing the NKG2D ligand retinoic acid early-inducible protein 1 (Rae-1), but not with RMA cells lacking MHC class I. NK cells from mice deficient for DAP10 and DAP12 or perforin did not undergo death, highlighting the importance of the NKG2D pathway for NK cell death. However, NKG2D does not transmit direct death signals in NK cells. Rather, the interaction between NKG2D and Rae-1 allowed NK cells to acquire tumor-derived Rae-1 by a membrane transfer process known as ”trogocytosis,” which was associated with clathrin-dependent NKG2D endocytosis. NK cells dressed with Rae-1 were lysed by neighboring NK cells through the NKG2D-induced perforin pathway in vitro and in vivo. These results provide the unique NKG2D function in negative regulation of activated NK cells.