Allogeneic hematopoietic stem cell transplantation (allo-HSCT) is one of the most widely applied forms of adoptive immunotherapy for the treatment of hematological malignancies. Detrimental graft-versus-host disease (GVHD), but also beneficial graft-versus-leukemia (GVL) effects occurring after allo-HSCT are largely mediated by alloantigen-reactive donor T cells in the graft. Separating GVHD from GVL effects is a formidable challenge, and a greater understanding of donor T cell biology is required to accomplish the uncoupling of GVHD from GVL. Here, we evaluated the role of β-catenin in this process. Using a unique mouse model of transgenic overexpression of human β-catenin (Cat-Tg) in an allo-HSCT model, we show here that T cells from Cat-Tg mice did not cause GVHD, and surprisingly, Cat-Tg T cells maintained the GVL effect. Donor T cells from Cat-Tg mice exhibited significantly lower inflammatory cytokine production and reduced donor T cell proliferation, while upregulating cytotoxic mediators that resulted in enhanced cytotoxicity. RNA sequencing revealed changes in the expression of 1169 genes for CD4, and 1006 genes for CD8+ T cells involved in essential aspects of immune response and GVHD pathophysiology. Altogether, our data suggest that β-catenin is a druggable target for developing therapeutic strategies to reduce GVHD while preserving the beneficial GVL effects following allo-HSCT treatment.