Allogeneic hematopoietic cell transplantation (HCT) has emerged as an important therapeutic option for several malignant and nonmalignant diseases. In addition to delivering systemic chemoradiotherapy, the therapeutic potential of allogeneic HCT relies on the graft-vs-leukemia (GVL) effect, which eradicates residual malignant cells by way of immunologic mechanisms. Unfortunately, GVL effects are closely associated with graft-vs-host disease (GVHD), the major complication of allogeneic HCT. Separation of the toxicity of acute GVHD from the beneficial GVL effects remains a major challenge to expanding the utility of this effective treatment modality. The pathophysiology of acute GVHD involves dysregulation of inflammatory cytokine cascades and donor T-cell responses to host alloantigens. Interleukin 18 (IL-18) is a recently discovered cytokine with potent immunomodulatory effects. This unique cytokine has the capacity to induce Th1 or Th2 polarization, depending on the immunologic context. The level of IL-18 is increased in acute GVHD, but this cytokine's role in the pathophysiology of acute GVHD is complex. It reduces the severity of acute GVHD as a T helper 1 (Th1)-inducing cytokine when administered early after bone-marrow transplant to the lethally irradiated recipients. When administered to the donor, it can also reduce the severity of acute GVHD, as a T helper 2 (Th2)-inducing cytokine. Despite reducing the severity of acute GVHD, IL-18 preserves the GVL effect after bone-marrow transplant. Thus IL-18 has the remarkable capacity to modulate acute GVHD when administered either to the donor or the recipient through distinct mechanisms.