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Atopic dermatitis (AD) is a chronic inflammatory skin disease that often precedes the development of food allergy, asthma, and allergic rhinitis. The prevailing paradigm holds that a reduced frequency and function of natural killer (NK) cell contributes to AD pathogenesis, yet the underlying mechanisms and contributions of NK cells to allergic comorbidities remain ill-defined. Here, analysis of circulating NK cells in a longitudinal early life cohort of children with AD revealed a progressive accumulation of NK cells with low expression of the activating receptor NKG2D, which was linked to more severe AD and sensitivity to allergens. This was most notable in children co-sensitized to food and aeroallergens, a risk factor for development of asthma. Individual-level longitudinal analysis in a subset of children revealed coincident reduction of NKG2D on NK cells with acquired or persistent sensitization, and this was associated with impaired skin barrier function assessed by transepidermal water loss. Low expression of NKG2D on NK cells was paradoxically associated with depressed cytolytic function but exaggerated release of the proinflammatory cytokine tumor necrosis factor-α. These observations provide important insights into a potential mechanism underlying the development of allergic comorbidity in early life in children with AD, which involves altered NK cell functional responses, and define an endotype of severe AD.