Acute graft-versus-host disease (GVHD) and leukemic relapse remain the two major obstacles to successful outcomes after allogeneic bone marrow transplantation (BMT). Recent studies have demonstrated that the loss of gastrointestinal tract integrity, and specifically the translocation of LPS into the systemic circulation, is critical to the induction of cytokine dysregulation that contributes to GVHD. Using a mouse BMT model, we studied the effects of direct LPS antagonism on GVHD severity and graft-versus-leukemia (GVL) activity. Administration of B975, a synthetic lipid-A analogue from day 0 to day +6, reduced serum TNF-alpha levels, decreased intestinal histopathology, and resulted in significantly improved survival and a reduction in clinical GVHD, compared with control-treated animals. Importantly, B975 had no effect on donor T cell responses to host antigens in vivo or in vitro. When mice received lethal doses of P815 tumor cells at the time of BMT, administration of B975 did not impair GVL activity and resulted in significantly improved leukemia-free survival. These findings reveal a critical role for LPS in the early inflammatory events contributing to GVHD and suggest that a new class of pharmacologic agents, LPS antagonists, may help to prevent GVHD while preserving T cell responses to host antigens and GVL activity.