Allogeneic bone marrow transplantation (allo-BMT) is a curative therapy for hematological malignancies, but is associated with significant complications, principally graft-versus-host disease (GVHD) and opportunistic infections. Natural killer (NK) cells mediate important innate immunity that provides a temporal bridge until the reconstruction of adaptive immunity. Here, we show that the development of GVHD after allo-BMT prevented NK-cell reconstitution, particularly within the maturing M1 and M2 NK-cell subsets in association with exaggerated activation, apoptosis, and autophagy. Donor T cells were critical in this process by limiting the availability of interleukin 15 (IL-15), and administration of IL-15/IL-15Rα or immune suppression with rapamycin could restore NK-cell reconstitution. Importantly, the NK-cell defect induced by GVHD resulted in the failure of NK-cell-dependent in vivo cytotoxicity and graft-versus-leukemia effects. Control of cytomegalovirus infection after allo-BMT was also impaired during GVHD. Thus, during GVHD, donor T cells compete with NK cells for IL-15 thereby inducing profound defects in NK-cell reconstitution that compromise both leukemia and pathogen-specific immunity.