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Hematopoietic cell transplantation (HCT) treats many blood conditions but remains underused due to complications such as graft‐versus‐host disease (GvHD). In GvHD, donor immune cells attack the patient, requiring powerful immunosuppressive drugs like glucocorticoids (GCs) to prevent death. In this study, we tested the hypothesis that donor cell conditioning with the glucocorticoid fluticasone propionate (FLU) prior to transplantation could increase hematopoietic stem cell (HSC) engraftment and reduce GvHD. Murine HSCs treated with FLU had increased HSC engraftment and reduced severity and incidence of GvHD after transplantation into allogeneic hosts. While most T cells died upon FLU treatment, donor T cells repopulated in the hosts and appeared less inflammatory and alloreactive. Regulatory T cells (Tregs) are immunomodulatory and survived FLU treatment, resulting in an increased ratio of Tregs to conventional T cells. Our results implicate an important role for Tregs in maintaining allogeneic tolerance in FLU‐treated grafts and suggest a therapeutic strategy of pre‐treating donor cells (and not the patients directly) with GCs to simultaneously enhance engraftment and reduce GvHD upon allogeneic HCT. Synopsis: Graft‐versus‐Host Disease (GvHD) is a life‐threatening complication of allogeneic hematopoietic cell transplantation (allo‐HCT). In this study, we examined the impact of conditioning donor grafts by pre‐treating with the glucocorticoid fluticasone propionate (FLU) prior to allo‐HCT in a mouse model of GvHD. FLU pre‐treatment increased Cxcr4 expression on mouse hematopoietic stem cells (HSCs) and led to increased transwell migration activity and HSC engraftment upon transplantation.FLU pre‐treatment reduced the incidence and severity of GvHD upon allo‐HCT in a mouse model of GvHD.FLU pre‐treatment decreased the viability, activation, and Th1 effector function of conventional T cells after allo‐HCT.FLU pre‐treatment spares regulatory T cells, leading to an overall increase in the ratio of tolerogenic Tregs versus allogeneic conventional T cells. [ABSTRACT FROM AUTHOR]