Kidney allograft failure is most often caused by chronic allograft nephropathy, a process of interstitial fibrosis (GIF) and tubular atrophy (TA). We assessed the pathology of living donor (LD) grafts compared to deceased donor (DD). Included are 321 recipients (245 LD; 76 DD) with protocol biopsies the first 2 years of transplant. In LD, GIF was present in 7%, 31%, 61% and 71% of grafts at 0, 4, 12 and 24 months. TA progressed in parallel to GIF. Compared to LD, more DD grafts had GIF at time 0 (29%, p = 0.002); thereafter the incidence of GIF was similar. In LD, GIF was associated with lower glomerular filtration rate (GFR)(1 year) (no GIF, 62 +/- 16; GIF, 49 +/- 15 mL/min/m(2) iothalamate clearance, p = 0.001) and reduced graft survival (HR = 2.2, p = 0.009). GIF in LD related to acute rejection (HR = 2.6, p = 0.01), polyoma nephropathy (OR = 4.4, p = 0.02) and lower levels of GFR 3 weeks post-transplant (HR = 0.961; p = 0.03, multivariate). However, GIF also developed in 53% of recipients lacking these covariates. Thus, GIF/TA develops in the majority of LD grafts, it is often mild but is associated with reduced function and survival. GIF frequently develops in the absence of risk factors. Lower GFR post-transplant identify patients at highest risk of GIF.