Graft-versus-host disease (GVHD) is a major complication of allogeneic bone marrow transplantation. It has been previously reported that lung GVHD severity directly correlates with the expansion of donor Th17 cells in the absence of IFN-γ. However, the consequence of Th17-associated lung GVHD in the presence of IFN-γ has not been well characterized. In the current study, T cells from IFN-γ receptor knockout (IFN-γR−/−) mice, capable of producing IFN-γ but unable to signal in response to IFN-γ, have been used to elucidate further the role of IFN-γ in GVHD. We found the transfer of donor T cells from either IFN-γR−/− or IFN-γ knockout (IFN-γ−/−) mice resulted in significant increases in donor Th17 cells in the lung. Marked increases in IL-4–producing Th2 cells infiltrating the lungs were also observed in the mice of donor IFN-γR−/− T cells. Notably, despite the presence of these cells, these mice did not show the severe immune-mediated histopathological lung injury observed in mice receiving donor IFN-γ−/− T cells. Increases in lung GVHD did occur in mice with donor IFN-γR−/− T cells when treated in vivo with anti–IFN-γ demonstrating that the cytokine has a protective role on host tissues in GVHD. A survival benefit from acute GVHD was also observed using donor cells from IFN-γR−/− T cells compared with control donors. Importantly, tumor-bearing mice receiving IFN-γR−/− T cells versus wild-type donor T cells displayed similar graft-versus-tumor (GVT) effects. These results demonstrate the critical role of IFN-γ on host tissues and cell effector functions in GVHD/GVT.