Human leukocyte antigen (HLA)-E binds epitopes derived from HLA-A, HLA-B, HLA-C and HLA-G signal peptides (SPs) and serves as a ligand for CD94/NKG2A and CD94/NKG2C receptors expressed on natural killer and T cell subsets. We show that among 16 common classical HLA class I SP variants, only 6 can be efficiently processed to generate epitopes that enable CD94/NKG2 engagement, which we term 'functional SPs'. The single functional HLA-B SP, known as HLA-B/-21M, induced high HLA-E expression, but conferred the lowest receptor recognition. Consequently, HLA-B/-21M SP competes with other SPs for providing epitope to HLA-E and reduces overall recognition of target cells by CD94/NKG2A, calling for reassessment of previous disease models involving HLA-B/-21M. Genetic population data indicate a positive correlation between frequencies of functional SPs in humans and corresponding cytomegalovirus mimics, suggesting a means for viral escape from host responses. The systematic, quantitative approach described herein will facilitate development of prediction algorithms for accurately measuring the impact of CD94/NKG2-HLA-E interactions in disease resistance/susceptibility.