Previously we demonstrated that SHIP−/− mice accept allogeneic bone marrow transplants (BMT) without significant acute graft-vs-host disease (GvHD). In this study we show that SHIP−/− splenocytes and lymph node cells are poor stimulators of allogeneic T cell responses that cause GvHD. Intriguingly, SHIP−/− splenocytes prime naive T cell responses to peptide epitopes, but, conversely, are partially impaired for priming T cell responses to whole Ag. However, dendritic cells (DC) purified from SHIP−/− splenocytes prime T cell responses to allogeneic targets, peptide epitopes, and whole Ag as effectively as SHIP+/+ DC. These findings point to an extrinsic effect on SHIP−/− DC that impairs priming of allogeneic T cell responses. Consistent with this extrinsic effect, we found that a dramatic expansion of myeloid suppressor cells in SHIP−/− mice impairs priming of allogeneic T cells. These findings suggest that SHIP expression or its activity could be targeted to selectively compromise T cell responses that mediate GvHD and graft rejection.