Prevention and treatment of graft-versus-host disease (GVHD) remains a major challenge, given that current T-cell depletion and mainstay immunosuppressive therapies compromise preexisting T-cell immunity, often leading to severe infections and disease relapse. Thus, there is a critical need for novel anti-GVHD agents that can spare protective T-cell memory. Here we show that milatuzumab (hLL1), a humanized anti-CD74 antagonist monoclonal antibody, can moderately reduce the numbers of CD74-expressing B cells and myeloid dendritic cells, but has no effect on the survival of T cells that are CD74⁻. Consequently, milatuzumab inhibits allogeneic T-cell proliferation in mixed leukocyte reactions. In a human/mouse xenogeneic SCID mouse model in which GVHD is induced and mediated by engrafted human CD4⁺ T cells and dendritic cells, milatuzumab effectively prevents the onset and manifestations of acute GVHD, suppresses serum levels of human IFN-γ and IL-5, eliminates the infiltration of human lymphocytes into GVHD target organs (ie, lung, liver, and spleen), and significantly promotes survival (90% versus 20% for controls; P = .0012). Importantly, exposure to milatuzumab does not affect the number of cytomegalovirus-specific, IFN-γ–producing human CD8⁺ T cells in allogeneic mixed leukocyte reactions. These encouraging results warrant further exploration of milatuzumab as a possible new therapeutic agent for GVHD.