Chronic graft versus host disease (cGVHD) patients have increased B cell-activating factor (BAFF) levels, but whether BAFF promotes disease after allogeneic bone marrow transplantation (allo-BMT) remains unknown. In a major MHC-mismatched model with cGVHD-like manifestations we first examined B-lymphopenic mMT allo-BMT recipients and found that increased BAFF levels in cGVHD mice were not merely a reflection of B cell number. Mice that later developed cGVHD, had significantly increased numbers of recipient fibroblastic reticular cells (FRCs) with higher BAFF transcript levels. Increased BAFF production by donor cells also likely contributed to cGVHD since BAFF transcript in CD4+ T cells from diseased mice and patients was increased. Chronic GVHD manifestations in mice associated with high BAFF/B cell ratios and persistence of B Cell Receptor (BCR)-activated B cells in peripheral blood and lesional tissue. By employing BAFF transgenic (Tg) mice donor cells, we addressed whether high BAFF contributed to BCR activation in cGVHD. BAFF increased NOTCH2 expression on B cells, augmenting BCR-responsiveness to surrogate antigen and NOTCH ligand. BAFF-Tg B cells had significantly increased protein levels of the proximal BCR signaling molecule SYK, and high SYK protein was maintained by BAFF after in vitro BCR-activation or when alloantigen was present in vivo. Using T-cell depleted (BM only) BAFF-Tg donors, we found that BAFF promoted cGVHD manifestations, circulating GL7+ B cells and alloantibody production. We demonstrate that pathological production of BAFF promotes an altered B-cell compartment and augments BCR-responsiveness. Our findings compel studies of therapeutic targeting of BAFF and BCR pathways in cGVHD patients.