Autoimmune limbic encephalitis (LE) is a rare, but devastating complication of allogeneic hematopoietic stem cell transplantation (HSCT). There is currently limited evidence describing the risk factors, laboratory features, and underlying mechanisms of this neurologic adverse event. We retrospectively reviewed available clinical, imaging, and laboratory data from adult patients with hematological malignancies who underwent haploidentical HSCT with post-transplant cyclophosphamide (PTCy) at Chungnam National University Hospital from June 2016 to May 2020. Patients who developed LE were compared to those who did not based on clinical assessment, serum inflammatory biomarkers, and reconstitution of various T cell populations. Of 35 patients, 4 developed LE. There were no differences in patient demographics, donor demographics, or treatment conditions between patients that did and did not develop LE. Overall, patients with LE had worse clinical outcomes and overall survival than those without. In addition, they tended to have higher markers of systemic inflammation in the early post-transplant period, including fever, C-reactive protein (CRP), and cytokines. Remarkably, baseline interleukin-6 levels before HSCT were found to be higher in patients who developed LE than those who did not. In addition, analysis of T cell subsets showed impaired expansion of CD25+FOXP3+ regulatory T (Treg) cells in LE compared to non-LE patients despite appropriate reconstitution of the total CD4+ T cell population. Patients that developed LE within the first 30 days of HSCT were likely to have high serum IL-6 among other inflammatory cytokines coupled with suppression of regulatory T cell differentiation. Further work is needed on the mechanisms underlying impaired Treg expansion following HSCT and potential therapies.