Natural killer (NK) cells are large granular lymphocytes capable of producing inflammatory cytokines and spontaneously killing malignant, infected or 'stressed' cells. These NK-cell functions are controlled by cell-surface receptors that titrate stimulatory and inhibitory signals. However, we remain puzzled about where and when NK cells develop and differentiate, and this has fuelled the debate over the diversification of the peripheral NK-cell pool: are NK cells functionally homogeneous or are there subsets with specialized effector functions? In this Review, we consider the developmental relationships and biological significance of the diverse NK-cell subsets in mice and humans, and discuss how new humanized mouse models may help to characterize them further.