We present a method for deriving natural killer (NK) cells from undifferentiated hESCs and iPSCs using a feeder-free approach. This method gives rise to high levels of NK cells after 4 weeks culture and can undergo further 2-log expansion with artificial antigen presenting cells. hESC- and iPSC-derived NK cells developed in this system have a mature phenotype and function. The production of large numbers of genetically modifiable NK cells is applicable for both basic mechanistic as well as anti-tumor studies. Expression of firefly luciferase in hESC-derived NK cells allows a non-invasive approach to follow NK cell engraftment, distribution, and function. We also describe a dual-imaging scheme that allows separate monitoring of two different cell populations to more distinctly characterize their interactions in vivo. This method of derivation, expansion, and dual in vivo imaging provides a reliable approach for producing NK cells and their evaluation which is necessary to improve current NK cell adoptive therapies.