A subset of NK cells bears incomplete V(D)J rearrangements, but neither the consequence to cell activities nor the precise developmental stages in which recombination occurs is known. These are important issues, as recombination errors cause cancers of the B and T lineages. Using transgenic recombination reporter mice to examine NK cell dynamics in vivo, we show that recombination+ NK cells have distinct developmental patterns in the BM, including reduced homeostatic proliferation and diminished Stat5 phosphorylation. In the periphery, both recombination+ and recombination- NK cells mediate robust functional responses including IFN-γ production, cytolysis, and tumor homing, suggesting that NK cells with distinct developmental histories can be found together in the periphery. We also show that V(D)J rearrangement marks both human cytolytic (CD56 dim) and immunoregulatory (CD56bright) populations, demonstrating the distribution of permanent DNA rearrangements across major NK cell subsets in man. Finally, direct quantification of rag transcripts throughout NK cell differentiation in both mouse and man establishes the specific developmental stages that are susceptible to V(D)J rearrangement. Together, these data demonstrate that multipotent progenitors rather than lineage-specified NK progenitors are targets of V(D)J recombination and that NK cells bearing the relics of earlier V(D)J rearrangements have different developmental dynamics but robust biological capabilities in vivo.