The liver contains both NK cells and their less cytotoxic relatives, ILC1. Here, we investigate the role of NK cells and ILC1 in the obesity-associated condition, non-alcoholic fatty liver disease (NAFLD). In the livers of mice suffering from NAFLD, NK cells are less able to degranulate, express lower levels of perforin and are less able to kill cancerous target cells than those from healthy animals. This is associated with a decreased ability to kill cancer cells in vivo. On the other hand, we find that perforin-deficient mice suffer from less severe NAFLD, suggesting that this reduction in NK cell cytotoxicity may be protective in the obese liver, albeit at the cost of increased susceptibility to cancer. The decrease in cytotoxicity is associated with a shift towards a transcriptional profile characteristic of ILC1, increased expression of the ILC1-associated proteins CD200R1 and CD49a, and an altered metabolic profile mimicking that of ILC1. We show that the conversion of NK cells to this less cytotoxic phenotype is at least partially mediated by TGFβ, which is expressed at high levels in the obese liver. Finally, we show that reduced cytotoxicity is also a feature of NK cells in the livers of human NAFLD patients.