STAT1 is the main signal transducer for type I and II IFNs and plays a central role in the regulation of innate and adaptive immune responses. We used Stat1-deficient mice to test the role of donor Stat1 in MHC-matched minor histocompatibility antigen-mismatched (mHA-mismatched) and fully MHC-mismatched models of bone marrow transplantation. Lack of Stat1 in donor splenocytes reduced graft-versus-host disease (GVHD) in both immunogenetic disparities, leading to substantially attenuated morbidity and mortality. Donor Stat1 deficiency resulted in reduced alloantigen-induced activation and expansion of donor T cells and correlated with the expansion of CD4+CD25+Foxp3+ Tregs in vivo. This expansion of Tregs was further confirmed by studies showing that Stat1 deficiency promoted the proliferation, while inhibiting the apoptosis, of natural Tregs, and that absence of Stat1 enhanced the induction of inducible Tregs both in vitro and in vivo. Ex vivo expanded Stat1-/- Tregs were superior to wild-type Tregs in suppressing alloantigen-driven expansion of T cells in vitro and in inhibiting the development of GVHD. These observations demonstrate that Stat1 is a regulator of Tregs and that targeting Stat1 in CD4+ T cells may facilitate in vitro and in vivo expansion of Tregs for therapeutic use.