Lower gastrointestinal (GI) tract graft-versus-host disease (GVHD) is the predominant cause of morbidity and mortality from GVHD after allogeneic stem cell transplantation. Recent data indicate that lower GI tract GVHD is a complicated process mediated by donor/host antigenic disparities. This process is exacerbated by significant changes to the microbiome, and innate and adaptive immune responses that are critical to the induction of disease, persistence of inflammation, and a lack of response to therapy. Here, we discuss new insights into the biology of lower GI tract GVHD and focus on intrinsic pathways and regulatory mechanisms crucial to normal intestinal function. We then describe multiple instances in which these homeostatic mechanisms are altered by donor T cells or conditioning therapy, resulting in exacerbation of GVHD. We also discuss data suggesting that some of these mechanisms produce biomarkers that could be informative as to the severity of GVHD and its response to therapy. Finally, novel therapies that might restore homeostasis in the GI tract during GVHD are highlighted.