Immune surveillance by T helper type 1 (T_H1) cells is not only critical for the host response to tumors and infection, but also contributes to autoimmunity and graft-versus-host disease (GVHD) after transplantation. The inhibitory molecule programmed death ligand 1 (PDL1) has been shown to anergize human T_H1 cells, but other mechanisms of PDL1-mediated T_H1 inhibition such as the conversion of T_H1 cells to a regulatory phenotype have not been well characterized. We hypothesized that PDL1 may cause T_H1 cells to manifest differentiation plasticity. Conventional T cells or irradiated K562 myeloid tumor cells overexpressing PDL1 converted TBET⁺ T_H1 cells into FOXP3⁺ regulatory T (T_reg) cells in vivo, thereby preventing human-into-mouse xenogeneic GVHD (xGVHD). Either blocking PD1 expression on T_H1 cells by small interfering RNA targeting or abrogation of PD1 signaling by SHP1/2 pharmacologic inhibition stabilized T_H1 cell differentiation during PDL1 challenge and restored the capacity of T_H1 cells to mediate lethal xGVHD. PD1 signaling therefore induces human T_H1 cells to manifest in vivo plasticity, resulting in a T_reg phenotype that severely impairs cell-mediated immunity. Converting human T_H1 cells to a regulatory phenotype with PD1 signaling provides a potential way to block GVHD after transplantation. Moreover, because this conversion can be prevented by blocking PD1 expression or pharmacologically inhibiting SHP1/2, this pathway provides a new therapeutic direction for enhancing T cell immunity to cancer and infection.