Phospholipase C-γ (PLCγ) is a key regulator of intracellular Ca2+ mobilization. Two isoforms of PLCγ have been identified, PLCγ1 and PLCγ2. Previously, in vitro studies indicated that activating NK cell receptors signal through both isoforms. However, PLCγ2 deficiency alone was sufficient to induce a substantial impairment of NK cell-mediated cytotoxicity in vitro. Why PLCγ2 is more important than PLCγ1 for NK cell activation and whether PLCγ2 is also critical for NK cell development, secretion of IFN-γ, and clearance of viral infections in vivo is not known. In this study, we report that PLCγ2 is the predominant isoform expressed in murine NK cells. PLCγ2 deficiency did not affect NK cell numbers in bone marrow and spleen, but acquisition of Ly49 receptors by NK cells was partially impaired. PLCγ2-deficient NK cells exhibited a dramatic impairment of cytolytic function and IFN-γ production upon ligation of activating receptors, whereas they did secrete IFN-γ in response to cytokines. Consequently, mice lacking PLCγ2 controlled murine CMV infection substantially less effectively than did wild-type animals, and this defect was most evident in the spleen, where viral clearance mostly depends on NK cell lytic function. These results demonstrate that PLCγ2 is crucial for development of the NK cell receptor repertoire and signaling of activating NK cell receptors, mediating optimal NK cell function in vivo.