Inducible costimulator (ICOS) is expressed on activated and memory T cells and is involved in the regulation of cytokine production. We studied the role of ICOS on alloreactive T cells in graft versus host disease (GVHD) and determined that ICOS expression was up-regulated on alloreactive T cells in recipients of an allogeneic hematopoietic stem cell transplantation (allo-HSCT) with GVHD. We compared ICOS^-/- T cells with wild-type (WT) T cells in 2 GVHD models. In both models, recipients of ICOS^-/- T cells demonstrated significantly less GVHD morbidity and mortality, which was associated with less intestinal and hepatic GVHD but increased cutaneous GVHD. In addition, recipients of ICOS^-/- donor T cells displayed a slight decrease in graft versus leukemia (GVL) activity. Further analysis of alloreactive ICOS^-/- T cells showed no defect in activation, proliferation, cytotoxicity, and target organ infiltration. Recipients of ICOS^-/- T cells had decreased serum levels of interferon-γ (IFN-γ), while interleukin-4 (IL-4) and IL-10 levels were increased, suggesting that alloreactive ICOS^-/- T cells are skewed toward T helper-2 (Th2) differentiation. These data suggest a novel role for ICOS in the regulation of Th1/Th2 development of activated T cells. In conclusion, alloreactive ICOS^-/- donor T cells induce less GVHD due to a Th2 immune deviation while GVL activity is slightly diminished.