Vortex fiber nulling (VFN) is a single-aperture interferometric technique for detecting and characterizing exoplanets separated from their host star by less than a diffracted beam width. VFN uses a vortex mask and single-mode fiber to selectively reject starlight while coupling off-axis planet light with a simple optical design that can be readily implemented on existing direct imaging instruments that can feed light to an optical fiber. With its axially symmetric coupling region peaking within the inner working angle of conventional coronagraphs, VFN is more efficient at detecting new companions at small separations than conventional direct imaging, thereby increasing the yield of on-going exoplanet search campaigns. We deployed a VFN mode operating in K band (2.0 to 2.5 μm) on the Keck Planet Imager and Characterizer (KPIC) instrument at the Keck II Telescope. We present the instrument design of this first on-sky demonstration of VFN and the results from on-sky commissioning, including planet and star throughput measurements and predicted flux-ratio detection limits for close-in companions. The instrument performance is shown to be sufficient for detecting a companion 10³ times fainter than a fifth magnitude host star in 1 h at a separation of 50 mas (1.1 λ / D). This makes the instrument capable of efficiently detecting substellar companions around young stars. We also discuss several routes for improvement that will reduce the required integration time for a detection by a factor >3.