Lag-3 has emerged as an important molecule in T cell biology. We investigated the role of Lag-3 in conventional T cell (Tcon) and regulatory T cell (Treg) function in murine GVHD with the hypothesis that Lag-3 engagement diminishes alloreactive T cell responses after bone marrow transplantation. We demonstrate that Lag-3 deficient Tcon (Lag-3(-/-) Tcon) induce significantly more severe GVHD than wild type (WT) Tcon and that the absence of Lag-3 on CD4 but not CD8 T cells is responsible for exacerbating GVHD. Lag-3(-/-) Tcon exhibited increased activation and proliferation as indicated by CFSE and bioluminescence imaging analyses and higher levels of activation markers such as CD69, CD107a, granzyme B, and Ki-67 as well as production of IL-10 and IFN-g early after transplantation. Lag-3(-/-) Tcon were less responsive to suppression by WT Treg as compared to WT Tcon. The absence of Lag-3, however, did not impair Treg function as both Lag-3(-/-) and WT Treg equally suppress the proliferation of Tcon in vitro and in vivo and protect against GVHD. Further, we demonstrate that allogeneic Treg acquire recipient MHC class II molecules through a process termed trogocytosis. As MHC class II is a ligand for Lag-3, we propose a novel suppression mechanism employed by Treg involving the acquisition of host MHC-II followed by the engagement of Lag-3 on T cells. These studies demonstrate for the first time the biologic function of Lag-3 expression on conventional and regulatory T cells in GVHD and identify Lag-3 as an important regulatory molecule involved in alloreactive T cell proliferation and activation after bone marrow transplantation.