The relationship between regulatory T cells (Tregs) and acute graft-versus-host disease (aGVHD) in clinical allogeneic bone marrow transplantation (BMT) recipients is not well established. We conducted a prospective analysis of peripheral blood Tregs as determined by the frequency of CD4⁺CD25^hiFOXP3⁺ lymphocytes in 215 BMT patients. Autologous BMT patients (N = 90) and allogeneic BMT patients without GVHD (N = 65) had similar Treg frequencies, whereas allogeneic patients with GVHD (N = 60) had Treg frequencies that were 40% less than those without GVHD. Treg frequencies decreased linearly with increasing grades of GVHD at onset, and correlated with eventual maximum grade of GVHD (P < .001). In addition, frequency of Tregs at onset of GVHD predicted the response to GVHD treatment (P = .003). Patients with Treg frequencies less than the median had higher nonrelapse mortality (NRM) than patients with Tregs greater than the median, but experienced equivalent relapse mortality, resulting in an inferior survival at 2 years (38% versus 63%, P = .03). Treg frequency may therefore have important prognostic value as a biomarker of acute GVHD.