Natural killer (NK) cells are a major component of the host antitumor immune response in human cancer. However, the nature, functional regulation, and clinical relevance of NK cells in gastric cancer remain largely unknown. In this study, we showed that the percentages of NK cells in tumors were significantly decreased, and low percentages of tumor-infiltrating NK cells were positively correlated with poor survival and disease progression. Although the expression of activating and inhibitory receptors on NK cells was shown to be not different between tumor and nontumor tissues, NK cells in tumors had impaired effector functions, characterized by decreased IFNγ, TNFα, and Ki-67 expression. We found that tumor-infiltrating monocytes/macrophages were physically close to NK cells, and their percentages negatively correlated with IFNγ⁺ and TNFα⁺ NK-cell percentages. Ex vivo study showed that isolated tumor-associated monocytes/macrophages could impair NK-cell expression of IFNγ, TNFα, and Ki-67. Blockade of TGFβ1 attenuated such monocytes/macrophages-mediated impairment of NK-cell function. Our data suggest that human NK-cell function was impaired by tumor-associated monocytes/macrophages, and that restoring NK-cell function may be an important therapeutic strategy to prevent tumor immune escape in gastric cancer. Cancer Immunol Res; 5(3); 248–56. ©2017 AACR.