Cytotoxic function of NK cells is largely suppressed in the tumor microenvironment by a number of distinct effectors and their secreted factors. The aims of this review are to provide a rationale and a potential mechanism for immunosuppression in cancer and to demonstrate the significance of such immunosuppression in cellular differentiation and progression of cancer. We have recently shown that NK cells mediate significant cytotoxicity against primary oral squamous carcinoma stem cells (OSCSCs) as compared to their more differentiated oral squamous carcinoma cells. In addition, human embryonic stem cells, mesenchymal stem cells (hMSCs), dental pulp stem cells (hDPSCs) and induced pluripotent stem cells were all significantly more susceptible to NK-cell-mediated cytotoxicity than their differentiated counterparts or parental cells from which they were derived. We have also reported that inhibition of differentiation or reversion of cells to a less-differentiated phenotype by blocking NFκB significantly augmented NK-cell function. Total population of monocytes and those depleted of CD16+ subsets were able to substantially suppress NK-cell-mediated lysis of OSCSCs, hMSCs and hDPSCs. Overall, our results suggest that stem cells but not their differentiated counterparts are significant targets of the NK-cell cytotoxicity. The concept of split anergy in NK cells and its contribution to cell differentiation, tissue repair and regeneration and in tumor resistance and progression will be discussed in this review.