DNAM-1 (CD226) is an activating receptor expressed on natural killer (NK) cells, CD8+ T cells, and other immune cells. Upon recognition of its ligands, CD155 and CD112, DNAM-1 promotes NK cell–mediated elimination of transformed and virus-infected cells. It also has a key role in expansion and maintenance of virus-specific memory NK cells. Herein, the mechanism by which DNAM-1 controls NK cell–mediated cytotoxicity and cytokine production was elucidated. Cytotoxicity and cytokine production triggered by DNAM-1 were mediated via a conserved tyrosine- and asparagine-based motif in the cytoplasmic domain of DNAM-1. Upon phosphorylation by Src kinases, this motif enabled binding of DNAM-1 to adaptor Grb2, leading to activation of enzymes Vav-1, phosphatidylinositol 3′ kinase, and phospholipase C-γ1. It also promoted activation of kinases Erk and Akt, and calcium fluxes. Although, as reported, DNAM-1 promoted adhesion, this function was signal-independent and insufficient to promote cytotoxicity. DNAM-1 signaling was also required to enhance cytotoxicity, by increasing actin polymerization and granule polarization. We propose that DNAM-1 promotes NK cell activation via an immunoreceptor tyrosine tail (ITT)–like motif coupling DNAM-1 to Grb2 and other downstream effectors.