Identifying factors that are predictive of allograft loss might be an important step toward prolonging kidney allograft survival. In this study we sought to determine the association between histologic changes on 1-year surveillance biopsies, changes in graft function and survival. This analysis included 292 adults, recipients of kidneys from living donors (69%) or deceased donors (31%), transplanted between 1998 and 2001 and followed up for 46 +/- 14 months. The primary end point was death-censored graft loss or a >50% reduction in GFR beyond 1 year. One-year biopsies were classified as: (i) Normal (N = 87, 30%), (ii) inflammation (N = 6, 2%), (iii) fibrosis (N = 131, 45%), (iv) fibrosis and inflammation (N = 53, 18%) and (v) transplant glomerulopathy (N = 15, 5%). By multivariate Cox analysis, survival related to biopsy classification (HR = 4.2, p = 0.001), graft function (HR = 0.97, p = 0.001) and HLA mismatches (HR = 1.003, p = 0.004). Using normal histology as a reference, fibrosis and inflammation (HR = 8.5, p < 0.0001) and glomerulopathy (HR = 10, p < 0.0001) related to poorer survival but mild fibrosis alone did not. Importantly, the degree of inflammation associated with fibrosis generally did not qualify for the diagnosis of borderline rejection. In conclusion, inflammation and glomerulopathy 1 year post-transplant predict loss of graft function and graft failure independently of function and other variables.