Acute graft-versus-host disease (GvHD) is a life-threatening complication of allogeneic hematopoietic cell transplantation (allo-HCT), a potentially curative treatment for leukemia. Endoplasmic reticulum (ER) stress occurs when the protein folding capacity of the ER is oversaturated. How ER stress modulates tissue homeostasis in the context of alloimmunity is not well understood. We show that ER stress contributes to intestinal tissue injury during GvHD and can be targeted pharmacologically. We observed high levels of ER stress upon GvHD onset in a murine allo- HCT model and in human biopsies. These levels correlated with GvHD severity, underscoring a novel therapeutic potential. Elevated ER stress resulted in increased cell death of intestinal organoids. In a conditional knockout model, deletion of the ER stress regulator transcription factor Xbp1 in intestinal epithelial cells induced a general ER stress signaling disruption and aggravated GvHD lethality. This phenotype was mediated by changes in the production of antimicrobial peptides and the microbiome composition as well as activation of pro-apoptotic signaling. Inhibition of inositol-requiring enzyme 1α (IRE1α), the most conserved signaling branch in ER stress, reduced GvHD development in mice. IRE1α blockade by the small molecule inhibitor 4m8c improved intestinal cell viability, without impairing hematopoietic regeneration and T-cell activity against tumor cells. Our findings in patient samples and mice indicate that excessive ER stress propagates tissue injury during GvHD. Reducing ER stress could improve the outcome of patients suffering from GvHD.