Deficiencies of the T cell and NK cell CD3ζ signaling adapter protein in patients with cancer and autoimmune diseases are well documented, but mechanistic explanations are fragmentary. The stimulatory NKG2D receptor on T and NK cells mediates tumor immunity but can also promote local and systemic immune suppression in conditions of persistent NKG2D ligand induction that include cancer and certain autoimmune diseases. In this paper, we provide evidence that establishes a causative link between CD3ζ impairment and chronic NKG2D stimulation due to pathological ligand expression. We describe a mechanism whereby NKG2D signaling in human T and NK cells initiates Fas ligand/Fas-mediated caspase-3/-7 activation and resultant CD3ζ degradation. As a consequence, the functional capacities of the TCR, the low-affinity Fc receptor for IgG, and the NKp30 and NKp46 natural cytotoxicity receptors, which all signal through CD3ζ, are impaired. These findings are extended to ex vivo phenotypes of T and NK cells among tumor-infiltrating lymphocytes and in peripheral blood from patients with juvenile-onset lupus. Collectively, these results indicate that pathological NKG2D ligand expression leads to simultaneous impairment of multiple CD3ζ-dependent receptor functions, thus offering an explanation that may be applicable to CD3ζ deficiencies associated with diverse disease conditions.