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B7-H1 (PD-L1) on immune cells plays an important role in T cell coinhibition by binding its receptor PD-1. Here, we show that both human and mouse intestinal epithelium express B7-H1 and that B7-H1-deficient mice are highly susceptible to dextran sodium sulfate (DSS)- or trinitrobenzenesulfonic acid (TNBS)-induced gut injury. B7-H1 deficiency during intestinal inflammation leads to high mortality and morbidity, which are associated with severe pathological manifestations in the colon, including loss of epithelial integrity and overgrowth of commensal bacteria. Results from bone marrow chimeric and knockout mice show that B7-H1 expressed on intestinal parenchyma, but not on hematopoietic cells, controls intestinal inflammation in an adaptive immunity-independent fashion. Finally, we demonstrate that B7-H1 dampened intestinal inflammation by inhibiting tumor necrosis factor α (TNF-α) production and by stimulating interleukin 22 secretion from CD11c+CD11b+ lamina propria cells. Thus, our data uncover a mechanism through which intestinal tissue-expressed B7-H1 functions as an essential ligand for innate immune cells to prevent gut inflammation.