Natural killer (NK) cells are CD3:TCR-, CD16+, CD56+ large granular lymphocytes capable of recognizing and eliminating a variety of virus-infected, malignant, and antibody-coated target cells. Two functionally distinct populations of peripheral blood NK cells can be differentiated by their surface expression of an isoform of the neural cell adhesion molecule (CD56). CD56bright NK cells have the attributes of an undifferentiated cell, in that they proliferate in response to exogenous cytokines, but exert poor cytolytic activity. CD56dim NK cells have the attributes of a more differentiated cell, in that they proliferate poorly in response to exogenous cytokines, but are potent cytolytic effector cells. Here we describe the molecular characterization of a NK cell restricted epitope (PEN5) that is selectively expressed on the functionally differentiated CD56dim NK cells. PEN5+ NK cells proliferate poorly in response to interleukin 2 (IL-2), but are potent cytolytic effectors, whereas PEN5- NK cells proliferate in response to IL-2, but are poor cytolytic effectors. Biochemical and immunochemical analyses reveal the PEN5 epitope to be an unusual sulfated poly-N-lactosamine carbohydrate related to keratan sulfate glycosaminoglycans. Immunoprecipitates prepared using a monoclonal antibody reactive with PEN5 include two polydisperse membrane-bound glycoproteins, PEN5 alpha (120-170 kD) and PEN5 beta (210-245 kD). Enzymatic deglycosylation reduces the apparent molecular weight of both PEN5 isoforms by 80-90%, and classifies PEN5 beta as a mucinlike glycoprotein. The surface expression of the PEN5 epitope is downmodulated by stimuli that induce NK cell proliferation, and it is absent from leukemic NK cells of patients with granular lymphocyte proliferative disorder. Taken together, these results indicate that PEN5 is a developmentally regulated poly-N-lactosamine epitope associated with a mucin-type glycoprotein, whose expression is restricted to the population of nonproliferative NK cells fully committed to cytolytic effector function.