Detailed analysis of the natural killer (NK) activity directed at nontumorigenic cell lines and their transformed tumorigenic derivatives has revealed a paradox. On the one hand, a correlation has been found between the tumorigenic potential of chemically transformed fibroblast cell lines and their sensitivity to NK cells in vitro. Nontransformed cells (N-type cell lines) and cells tumorigenic in normal mice (C-type cell lines) are resistant to NK-mediated lysis. In contrast, cell lines that are tumorigenic in ATxFL mice (these mice are very low in NK activity), but not in normal mice (I-type cell lines) are sensitive to NK-mediated lysis. These findings support the concept that NK activity is involved in host surveillance against tumors. On the other hand, NK-resistant fibroblasts, whether taken directly form animals or derived as tumorigenic or nontumorigenic cell lines, compete with NK-sensitive target cells to inhibit their lysis by NK effectors. Not only are both NK-sensitive and -resistant cells recognized by NK effectors but both receive lytic signals from NK effector cells. Target cell resistance is a result of a protein synthesis-dependent mechanism that prevents lysis such that in the presence of inhibitors of protein synthesis all fibroblasts tested are NK sensitive. Those fibroblasts that are normally sensitive to NK-mediated lysis must be deficient in their ability to produce or respond to this counterlytic mechanism. These findings are in contrast with the general findings when lymphoid cells are studied as NK targets where sensitivity appears to be a result of recognition by NK effectors. Because our findings show that transformed and normal cells express the same recognition determinants, in order for NK activity to play an important in vivo role in tumor surveillance, a mechanism must operate to permit NK effectors to find their targets in vivo. In the absence of a special discrimination mechanism, the killing of NK-sensitive transformants that arise autochronously would be less than optimal as a consequence of competition by the normal, NK-resistant, cells.