Routine methods to maximize the graft-versus-leukemia (GvL) activity of allogeneic hematopoietic stem cell transplantation (HSCT) without the detrimental effects of graft-versus-host disease (GvHD) are lacking. Depletion or inhibition of alloreactive T cells is partially effective in preventing GvHD, but usually leads to decreased GvL activity. The current model for the pathophysiology of acute GvHD describes a series of immune pathways that lead to activation of donor T cells and inflammatory cytokines responsible for tissue damage in acute GvHD. This model does not account for how allotransplant can lead to GvL effects without GvHD, or how the initial activation of donor immune cells may lead to counter-regulatory effects that limit GvHD. In this review, we will summarize new findings that support a more complex model for the initiation of GvHD and GvL activities in allogeneic HSCT, and discuss the potential of novel strategies to enhance GvL activity of the transplant.