Irradiated CBA/J mice transplanted with H-2 compatible, minor histocompatibility disparate B10.BR bone marrow develop graft-versus-host disease (GVHD) if mature T lymphocytes are added to the marrow inoculum. In the setting of mild GVHD (receiving 10(4) or 10(5) T cells), by phenotypic analysis, lymphoid reconstitution occurs normally within 4 to 6 wk but there is a profound deficiency in the ability of splenic lymphocytes to respond to polyclonal activators such as LPS and Con A. This unresponsiveness is attributable to active suppression mediated by cells that express Thy-1 and can be removed with leucine methyl ester treatment. Thus, splenocytes from mice with GVHD suppress responses of normal T and B lymphocytes. Moreover, depletion of these suppressor cells restores normal function to splenocytes from mice with GVHD, and B cells isolated from these mice respond normally to T-dependent and -independent stimulation. Finally, IFN-gamma plays an important role in this suppression, because a neutralizing anti-IFN-gamma mAb significantly removes suppression of normal cells and restores functional responses of lymphocytes from mice with GVHD. These results provide insights into the mechanisms of immunodeficiency associated with GVHD, and suggest novel strategies for possible therapies for this disorder.