Graft-versus-host (GVH) disease (GVHD) continues to be a major life-threatening complication after allogeneic bone marrow transplantation. Considerable progress has been made elucidating the pathophysiology of acute GVHD. Mature donor T cells transferred along with the marrow graft directly recognize antigenic differences on antigen-presenting cells of the host. Once activated, donor antihost-specific T cells can mediate tissue destruction. Interestingly, the failure to clonally delete autoreactive T cells in the thymus can also lead to an autoimmune syndrome mimicking the pathology of GVHD. Negative selection in the thymus may be compromised either by damage to the thymic epithelium (because of a direct attack by donor antihost alloreactive T cells) or by the use of immunosuppressive drugs that inhibit clonal deletion. An important component underlying GVHD mediated by either alloreactive or autoreactive T cells is the absence of a competent peripheral regulatory system. Studies in animal model systems clearly indicate that regulatory T cells play a vital role in down-regulating GVHD and are critically important for the establishment of active dominant tolerance to both allo- and self-major histocompatibility complex antigens. Although multiple populations of cells appear to participate in this process, CD4(+) regulatory T cells that innately express CD25(+) appear to orchestrate the regulatory control of the immune response. Evidence for regulatory T cells in clinical bone marrow transplantation, however, remains rudimentary. The recent identification that CD4(+)CD25(+) regulatory T cells preferentially express the Foxp3 nuclear transcription factor and the development of molecular reagents to isolate antigen-specific T cells have provided unique opportunities to explore immunoregulatory mechanisms after clinical marrow transplantation. Recent studies in recipients of clinical bone marrow transplantation suggest that antigen-specific CD4(+)CD25(+)Foxp3(+) T cells play a vital role in the regulatory control of GVH reactions mediated by both alloreactive and autoreactive lymphocytes. These regulatory T cells also appear to facilitate the establishment of donor antihost and donor antidonor (self) tolerance.