Infections and acute graft-versus-host disease (aGVHD) are major causes of treatment-related mortality and morbidity following allogeneic haematopoietic stem cell transplantation (HSCT). Both complications depend on reconstitution of the T-lymphocyte population based on donor T cells. Although it is well established that Interleukin-7 (IL-7) is a cytokine essential for de novo T cell development in the thymus and homoeostatic peripheral expansion of T cells, associations between circulating levels of IL-7 and T cell reconstitution following HSCT have not been investigated previously. We prospectively measured IL-7 levels in 81 patients undergoing myeloablative HSCT with either sibling donor or an unrelated donor. Plasma IL-7 levels peaked at day +7 post-transplant (1.3–82.4 pg/ml), at the time of maximal lymphopaenia. In multivariate analysis, peak levels of IL-7 were significantly higher in patients treated with anti-thymocyte globulin (ATG) compared with those not treated with ATG (P = 0.0079). IL-7 levels at day +7 were negatively associated with T cell counts at day +30 to +60 (at day +60: CD3+: β = −10.6 × 106 cells/l, P = 0.0030; CD8+: β = −8.4 × 106 cells/l, P = 0.061; CD4+: β = −2.1 × 106 cells/l, P = 0.062) in multivariate analyses. In adults, high IL-7 levels were associated with increased risk of grade II-IV aGVHD (OR = 5.4, P = 0.036) and reduced overall survival (P = 0.046). The present data indicate that high plasma levels of IL-7 in the early post-transplant period are predictive for slow T cell reconstitution, increased risk of aGVHD and increased mortality following HSCT.