IL-21 is a proinflammatory cytokine produced by Th17 cells. Abrogation of IL-21 signaling has recently been shown to reduce GVHD while retaining graft-versus-leukemia/lymphoma (GVL) responses. However, the mechanisms by which IL-21 may lead to a separation of GVHD and GVL remain incompletely understood. In a murine MHC-mismatched BM transplantation model, we observed that IL-21 receptor knockout (IL-21R KO) donor T cells mediate decreased systemic and gastrointestinal GVHD in recipients of a transplant. This reduction in GVHD was associated with expansion of transplanted donor regulatory T cells and with tissue-specific modulation of Th-cell function. IL-21R KO and wild-type donor T cells showed equivalent alloactivation, but IL-21R KO T cells showed decreased infiltration and inflammatory cytokine production within the mesenteric lymph nodes. However, Th-cell cytokine production was maintained peripherally, and IL-21R KO T cells mediated equivalent immunity against A20 and P815 hematopoietic tumors. In summary, abrogation of IL-21 signaling in donor T cells leads to tissue-specific modulation of immunity, such that gastrointestinal GVHD is reduced, but peripheral T-cell function and GVL capacity are retained. IL-21 is thus an exciting target for therapeutic intervention and improvement of clinical transplantation outcomes.