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The paradigm that chronic rejection causes all progressive late allograft failure has been replaced by a hypothesis of cumulative damage, where a series of time-dependent immune and nonimmune mechanisms injure the kidney and lead to chronic interstitial fibrosis and tubular atrophy, representing a final common pathway of injury and its consequent fibrotic healing response. Allograft damage is common, progressive, time-dependent, clinically important and modified by immunosuppression. Early after transplantation, tubulointerstitial damage is predominantly related to ischemia reperfusion injury, acute tubular necrosis, acute and subclinical rejection and/or calcineurin inhibitor nephrotoxicity, superimposed on preexisting donor disease. Later, cellular inflammation lessens and is replaced by microvascular and glomerular injury from calcineurin inhibitor nephrotoxicity, hypertension, immune-mediated fibrointimal vascular hyperplasia, transplant glomerulopathy and capillary injury, polyoma virus and/or recurrent glomerulonephritis. Additional mechanisms of injury include internal architectural disruption of the kidney, cortical ischemia, persistent chronic inflammation, replicative senescence, cytokine excess and fibrosis induced by epithelial-to-mesenchymal transition. Current understanding of the etiology, pathophysiology and evolution of pathological changes are detailed. An approach to histological assessment of the individual failing graft are presented and a series of postulates are defined for future studies of chronic allograft nephropathy.