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With improved immunosuppression and early allograft survival, chronic allograft nephropathy has become the dominant cause of kidney-transplant failure.We evaluated the natural history of chronic allograft nephropathy in a prospective study of 120 recipients with type 1 diabetes, all but 1 of whom had received kidney-pancreas transplants. We obtained 961 kidney-transplant-biopsy specimens taken regularly from the time of transplantation to 10 years thereafter.Two distinctive phases of injury were evident as chronic allograft nephropathy evolved. An initial phase of early tubulointerstitial damage from ischemic injury (P<0.05), prior severe rejection (P<0.01), and subclinical rejection (P<0.01) predicted mild disease by one year, which was present in 94.2 percent of patients. Early subclinical rejection was common (affecting 45.7 percent of biopsy specimens at three months), and the risk was increased by the occurrence of a prior episode of severe rejection and reduced by tacrolimus and mycophenolate therapy (both P<0.05) and gradually abated after one year. Both subclinical rejection and chronic rejection were associated with increased tubulointerstitial damage (P<0.01). Beyond one year, a later phase of chronic allograft nephropathy was characterized by microvascular and glomerular injury. Chronic rejection (defined as persistent subclinical rejection for two years or longer) was uncommon (5.8 percent). Progressive high-grade arteriolar hyalinosis with luminal narrowing, increasing glomerulosclerosis, and additional tubulointerstitial damage was accompanied by the use of calcineurin inhibitors. Nephrotoxicity, implicated in late ongoing injury, was almost universal at 10 years, even in grafts with excellent early histologic findings. By 10 years, severe chronic allograft nephropathy was present in 58.4 percent of patients, with sclerosis in 37.3 percent of glomeruli. Tubulointerstitial and glomerular damage, once established, was irreversible, resulting in declining renal function and graft failure.Chronic allograft nephropathy represents cumulative and incremental damage to nephrons from time-dependent immunologic and nonimmunologic causes.2326-33.