The hierarchical galaxy formation scenario in the Cold Dark Matter cosmology with a non-vanishing cosmological constant Λ and geometrically flat space (ΛCDM) has been very successful in explaining the large-scale distribution of galaxies. However, there have been claims that ΛCDM over-predicts the number of satellite galaxies associated with massive galaxies compared with observations—the missing satellite galaxy problem1-3. Isolated groups of galaxies hosted by passively evolving massive early-type galaxies are ideal laboratories for identifying the missing physics in the current theory4-11. Here, we report—based on a deep spectroscopic survey—that isolated massive and passive early-type galaxies without any signs of recent wet mergers or accretion episodes have almost no satellite galaxies fainter than the r-band absolute magnitude of about Mr = -14. If only early-type satellites are used, the cutoff is at the somewhat brighter magnitude of about Mr = -15. Such a cutoff has not been found in other nearby satellite galaxy systems hosted by late-type galaxies or those with merger features. Various physical properties of satellites depend strongly on the host-centric distance. Our observations indicate that the satellite galaxy luminosity function is largely determined by the interaction of satellites with the environment provided by their host.