Hepatic stellate cells (HSCs) store 75% of the body's supply of vitamin A (retinol) and play a key role in liver fibrogenesis. During liver injury, HSCs become activated and susceptible to natural killer (NK) cell killing due to increased expression of the NK cell activating ligand retinoic acid early inducible gene 1 (RAE-1). To study the mechanism by which RAE-1 is upregulated in HSCs during activation, an in vitro model of cultured mouse HSCs was employed. RAE-1 was detected at low levels in quiescent HSCs but upregulated in 4- and 7-day cultured HSCs (early activated HSCs), while 21-day cultured HSCs (fully activated HSCs) lost RAE-1 expression. High levels of RAE-1 in 4- and 7-day cultured HSCs correlated with their susceptibility to NK cell killing, which was diminished by treatment with RAE-1 neutralizing antibody. Furthermore, retinoic acid (RA) and retinal dehydrogenase (Raldh) levels were upregulated in early activated HSCs compared to quiescent or fully activated HSCs. Blocking RA synthesis by the Raldh inhibitor or blocking RA signaling by the RAR antagonist abolished upregulation of RAE-1 while treatment with RA induced RAE-1 expression in HSCs. In conclusion, during activation, HSCs lose retinol, which is either secreted out or oxidized into RA, the latter stimulates RAE-1 expression and sensitizes early activated HSCs to NK cell killing. In contrast, fully activated HSCs become resistant to NK cell killing due to lack of RAE1 expression, leading to chronic liver fibrosis and disease.