BACKGROUND: We had previously reported significant association of immunoectoenzyme CD26 expression on donor harvest with acute Graft-versus-Host-Disease (aGVHD) in allogeneic stem cell transplantation (ASCT) patients. The current study was aimed at analysing CD26 signaling pathway molecules and understanding their impact on immune reconstitution and clinical outcomes post-ASCT. SUBJECTS AND METHODOLOGY: The study cohort included 26 transplant donors/patients who underwent reduced intensity (n = 21), myeloablative (n = 4) and non-myeloablative (n = 1) ASCT for hematological malignancies. Donors were matched related donors (n = 19) and haploidentical donors (n = 7). Surface expression of CD26, CD73 and ADA, and various immune cell subtypes were assessed by multicolour-flow cytometry. Soluble CD26 (sCD26) and cytokine levels were measured in plasma samples by ELISA and Multiplex Luminex assay, respectively. Immune cells from healthy individuals were stimulated with phytohemagglutinin (PHA) in the presence or absence of CD26 inhibitor. Effect of CD26 inhibition on NF-κB localization in PHA stimulated cells was analysed by immunofluorescence and confocal microscopy. Pro-inflammatory cytokines from the culture supernatants were detected with Cytometric bead array flow cytometry. Association of all measured markers with clinical outcomes was evaluated using appropriate statistical tests. RESULTS: CD26 surface expression on PBSC donor harvest cells showed increased risk of chronic GVHD (cGVHD, p = 0.055). Amongst the various immune cell subtypes, decreased B cells in harvest showed significant association with aGVHD (p = 0.022) whereas increased myeloid dendritic cells and CD3+T cells at Day100 in peripheral blood of transplant recipients correlated with cGVHD (p = 0.046) and aGVHD (p = 0.035), respectively. Further, high sCD26 in transplant recipients at Day100 exhibited association with reduced event-free survival (EFS) (p = 0.011). Higher CD26 expression on more & less mature NK cells, naïve & post-switched memory B cells and Treg cells in the donor harvest (p < 0.05) led to lower EFS in transplant recipients. Mechanistically, CD26 inhibitor caused dose-dependent reduction in CD26 enzyme activity and in pro-inflammatory cytokine production in post mitogen-stimulated T cell cultures. CONCLUSION: Our study has implicated that lower CD26 expression on immune cell subtypes of the donor stem cell harvest is associated with reduced risk of GVHD and better survival. The underlying mechanism was found to be through NF-κB pathway and pro-inflammatory cytokines. Based on these observations, chemically designed or natural resources-based CD26 inhibitors can be explored further in clinical trials for improving ASCT outcomes.