TCRαβ+ CD4-CD8-NK- double negative T cells (DN T cells) can act as regulatory T cells to inhibit allograft rejection and autoimmunity. Their role in graft-versus-host disease and mechanisms of suppression remain elusive. In this study, we demonstrate that DN T cells can inhibit CD4+ T cell-mediated GVHD in a semi-allogeneic model of bone marrow transplantation. Furthermore, we present evidence of a novel autocrine IFNγ signaling pathway in Fas-deficient C57BL/6.lpr (B6.lpr) DN T cells. B6.lpr DN T cells lacking IFNγ or its receptor were impaired in their ability to suppress syngeneic CD4+ T cells responding to alloantigen stimulation both in vitro and in vivo. Autocrine IFNγ signaling was required for sustained B6.lpr DN T cell IFNγ secretion in vivo and for upregulation of surface Fas ligand expression during TCR stimulation. Fas ligand (FasL) expression by B6.lpr DN T cells permitted lysis of activated CD4+ T cells and was required for suppression of GVHD. Collectively, our data indicate that DN T cells can inhibit GVHD and that IFNγ plays a critical autocrine role in controlling the regulatory function of B6.lpr DN T cells.