Tissue-resident Natural Killer (trNK) cells are crucial components of local immunity that activate rapidly upon infection. However, under steady state conditions, their responses are tightly controlled to prevent unwanted tissue damage. The mechanisms governing their differentiation and activation are not fully understood. Here, we characterise uterine trNK cells longitudinally during pregnancy by single cell RNA sequencing and find that the combined expression pattern of 4-1BB and CD55 defines their three distinct stages of differentiation in mice. Mechanistically, an IL-21R-STAT3 axis is essential for initiating the trNK cell differentiation. The fully differentiated trNK cells demonstrate enhanced functionality, which is necessary for remodelling spiral arteries in the decidua. We identify an apoptotic program that is specific to the terminal differentiation stage, which may preclude tissue damage by these highly activated trNK cells. In summary, uterine trNK cells become intensely active and effective during pregnancy, but tightly controlled via a differentiation program that also limits potential harm, suggesting an intricate mechanism for harnessing trNK cells in maintaining pregnancy.