Hematopoietic stem cell transplantation (HCT) is a curative procedure for hematological malignancies, but chronic graft-versus-host disease (cGVHD) remains a major complication after allogeneic HCT. Because donor B cells are essential for cGVHD development and B cells are sensitive to endoplasmic reticulum (ER) stress, we hypothesized that the IRE-1α/XBP-1 pathway is required for B-cell activation and function and for the development of cGVHD. To test this hypothesis, we used conditional knock-out mice deficient of XBP-1 specifically in B cells. Recipients transplanted with donor grafts containing XBP-1–deficient B cells displayed reduced cGVHD compared with controls. Reduction of cGVHD correlated with impaired B-cell functions, including reduced production of anti–double-stranded DNA immunoglobulin G antibodies, CD86, Fas, and GL7 surface expression, and impaired T-cell responses, including reduced interferon-γ production and follicular helper T cells. In a bronchiolitis obliterans cGVHD model, recipients of transplants containing XBP-1–deficient B cells demonstrated improved pulmonary function correlated with reduced donor splenic follicular helper T cells and increased B cells compared with those of wild-type control donor grafts. We then tested if XBP-1 blockade via an IRE-1α inhibitor, B-I09, would attenuate cGVHD and preserve the graft-versus-leukemia (GVL) effect. In a cutaneous cGVHD model, we found that prophylactic administration of B-I09 reduced clinical features of cGVHD, which correlated with reductions in donor T-cell and dendritic cell skin infiltrates. Inhibition of the IRE-1α/XBP-1 pathway also preserved the GVL effect against chronic myelogenous leukemia mediated by allogeneic splenocytes. Collectively, the ER stress response mediated by the IRE-1α/XBP-1 axis is required for cGVHD development but dispensable for GVL activity.