Abstract Soluble thrombomodulin plasma concentrations are elevated in steroid-resistant graft-versus-host disease (GVHD), implying endothelial hypofunctioning for thrombomodulin-dependent generation of activated protein C’s (APC) anticoagulant, anti-inflammatory, and antiapoptotic functions. Recombinant thrombomodulin or APC administration decreases acute GVHD, manifested by intense inflammation and tissue destruction. Here, we administered recombinant murine wild-type (WT) APC to mice with established chronic GVHD (cGVHD), a less-inflammatory autoimmune-like disease. WT APC normalized bronchiolitis obliterans–induced pulmonary dysfunction. Signaling-selective APC variants (3A-APC [APC with lysine 191-193 replaced with 3 alanines] or 5A-APC [APC with lysine 191-193 replaced with 3 alanines and arginine 229/230 replaced with 2 alanines]) with normal cytoprotective properties, but greatly reduced anticoagulant activity, provided similar results. Mechanistically, WT APC and signaling-selective variants reduced T follicular helper cells, germinal center formation, immunoglobulin, and collagen deposition. WT APC can potentially cleave protease-activated receptor 1 (PAR1) at Arg41 or Arg46, the latter causing anti-inflammatory signaling. cGVHD was reduced in recipients of T cells from WT PAR1 or mutated Gln41-PAR1 donors but not from mutated Gln46-PAR1 donors. These data implicate donor T-cell APC-induced noncanonical cleavage at Arg46-PAR1, which is known to confer cytoprotective and anti-inflammatory activities. Together, these data indicate that APC anticoagulant activity is dispensable, whereas anti-inflammatory signaling and cytoprotective cell signaling by APC are essential. Because a phase 2 ischemic stroke clinical trial did not raise any safety issues for 3A-APC treatment, our studies provide a foundational platform for testing in clinical cGVHD therapy.