NKG2D recognizes multiple diverse ligands. Despite recent efforts in determining the crystal structures of NKG2D-ligand complexes, the principle governing this receptor-ligand recognition and hence the criteria for identifying unknown ligands of NKG2D remain central issues to be resolved. Here we compared the molecular recognition between NKG2D and three of the known ligands, UL16 binding protein (ULBP), MHC class I-like molecule, and retinoic acid early inducible gene as observed in the ligand-complexed crystal structures. The comparison shows that while the receptor uses a common interface region to bind the three diverse ligands, each ligand forms a distinct, but overlapping, set of hydrogen bonds, hydrophobic interactions, and salt bridges, illustrating the underlying principle of NKG2D-ligand recognition being the conservation in overall shape complementarity and binding energy while permitting variation in ligand sequence through induced fit recognition. To further test this hypothesis and to distinguish between diverse recognition and promiscuous ligand binding, four ULBP3 interface mutations, H21A, E76A, R82M, and D169A, were generated to each disrupt a single hydrogen bond or salt bridge. All mutant ULBP3 displayed reduced receptor binding, suggesting a specific, rather than promiscuous, receptor-ligand recognition. Mutants with severe loss of binding affect the receptor interactions that are mostly buried. Finally, a receptor-ligand recognition algorithm was developed to assist the identification of diverse NKG2D ligands based on evaluating the potential hydrogen bonds, hydrophobic interactions, and salt bridges at the receptor-ligand interface.