Macrophage infiltration of skin GVHD lesions correlates directly with disease severity, but the mechanisms underlying this relationship remain unclear and GVHD with many macrophages is a therapeutic challenge. Here, we characterize the macrophages involved in GVHD and report that dexamethasone palmitate (DP), a liposteroid, can ameliorate such GVHD by inhibiting macrophage functions. We found that host-derived macrophages could exacerbate GVHD in a mouse model through expression of higher levels of pro-inflammatory TNF-α and IFN-γ, and lower levels of anti-inflammatory IL-10 than resident macrophages in mice without GVHD. DP significantly decreased the viability and migration capacity of primary mouse macrophages compared to conventional dexamethasone in vitro. DP treatment on day 7 and day 14 decreased macrophage number, and attenuated GVHD score and subsequent mortality in a murine model. This is the first study to provide evidence that therapy for GVHD should be changed on the basis of infiltrating cell type.