We investigated keratinocyte growth factor (KGF) as a pretreatment therapy for idiopathic pneumonia syndrome (IPS) generated as a result of lung damage and allogeneic T cell-dependent inflammatory events occurring in the early peri-bone marrow (BM) transplant (BMT) period. B10.BR (H2(k)) recipient mice were transplanted with C57BL/6 (H2(b)) BM with spleen cells after lethal irradiation with and without cyclophosphamide conditioning with and without subcutaneous KGF pretreatment. KGF-pretreated mice had fewer injured alveolar type II (ATII) cells at the time of BMT and exhibited ATII cell hyperplasia at day 3 post-BMT. The composition of infiltrating cells on day 7 post-BMT was not altered by KGF pretreatment, but the frequencies of cells expressing the T-cell costimulatory molecules B7.1 and B7.2 and mRNA for the cytolysin granzyme B (usually increased in IPS) were decreased by KGF. Sera from KGF-treated mice had increases in the Th2 cytokines interleukin (IL)-4, IL-6, and IL-13 4 days after cessation of KGF administration (i.e., at the time of BMT). These data suggest that KGF hinders IPS by two modes: 1) stimulation of alveolar epithelialization and 2) attenuation of immune-mediated injury as a consequence of failure to upregulate cytolytic molecules and B7 ligand expression and the induction of anti-inflammatory Th2 cytokines in situ.