Phospholipase C-gamma2 (PLC-gamma2) is a key component of signal transduction in leukocytes. In natural killer (NK) cells, PLC-gamma2 is pivotal for cellular cytotoxicity; however, it is not known which steps of the cytolytic machinery it regulates. We found that PLC-gamma2-deficient NK cells formed conjugates with target cells and polarized the microtubule-organizing center, but failed to secrete cytotoxic granules, due to defective calcium mobilization. Consequently, cytotoxicity was completely abrogated in PLC-gamma2-deficient cells, regardless of whether targets expressed NKG2D ligands, missed self major histocompatibility complex (MHC) class I, or whether NK cells were stimulated with IL-2 and antibodies specific for NKR-P1C, CD16, CD244, Ly49D, and Ly49H. Defective secretion was specific to cytotoxic granules because release of IFN-gamma on stimulation with IL-12 was normal. Plcg2-/- mice could not reject MHC class I-deficient lymphoma cells nor could they control CMV infection, but they effectively contained Listeria monocytogenes infection. Our results suggest that exocytosis of cytotoxic granules, but not cellular polarization toward targets, depends on intracellular calcium rise during NK cell cytotoxicity. In vivo, PLC-gamma2 regulates selective facets of innate immunity because it is essential for NK cell responses to malignant and virally infected cells but not to bacterial infections.