The effects of prednisone (Pred) and azathioprine (Aza) on a rat model of chronic cyclosporine (CsA) nephropathy were studied. Twenty-four salt-depleted Sprague-Dawley rats were randomized to four groups: (1) control; (2) CsA 15 mg/kg; (3) CsA/Aza 5 mg/kg, and (4) CsA/Pred 1 mg/kg. After 4 weeks, functional measurements, including urinary N-acetyl-beta-D-glucosaminidase (NAG) levels, were determined. Semiquantitative grading of cortical and medullary damage was done. Cross-sectional areas of medullary thick ascending limbs (mTAL) and collecting ducts (CD) were determined. Tubulointerstitial injury was equivalent in all CsA groups, but tended to be lowest in the CsA/Pred group. Mean mTAL size in the CsA/Pred group was significantly greater than controls (p = 0.035). In contrast, mean CD size was not different among all groups. All CsA-treated animals had significantly larger hypertrophic mTAL than controls. The degree of hypertrophy was even greater in the CsA/Pred group (p = 0.006 vs. the other CsA-treated groups). Mean mTAL size was found to correlate with creatinine clearance, free water reabsorption, and urinary NAG. The percent of hypertrophic mTAL was found to correlate with creatinine clearance, free water reabsorption, and urinary NAG. This report shows that Pred alters the nephrotoxic effect of CsA, permitting a predominantly hypertrophic, rather than atrophic, medullary response. The extent of hypertrophy, in all CsA-treated groups, correlated with improved functional parameters, suggesting that at least in one phase of CsA nephropathy compensatory responses preserve renal function.