Kidney injury molecule-1 (KIM-1) is a specific histological biomarker for diagnosing early tubular injury on renal biopsies. In this study, KIM-1 expression was quantitated in renal transplant biopsies by immunohistochemistry and correlated with renal function. None of the 25 protocol biopsies showed detectable tubular injury on histologic examination, yet 28% had focal positive KIM-1 expression. Proximal tubule KIM-1 expression was present in all biopsies from patients with histological changes showing acute tubular damage and deterioration of kidney function. In this group, higher KIM-1 staining predicted a better outcome with improved blood urea nitrogen (BUN), serum creatinine, and estimated glomerular filtration rate (eGFR) over an ensuing 18 months. KIM-1 was expressed focally in affected tubules in 92% of kidney biopsies from patients with acute cellular rejection. By contrast, there was little positive staining for Ki-67, a cell proliferation marker, in any of the groups. KIM-1 expression significantly correlated with serum creatinine and BUN, and inversely with the eGFR on the biopsy day. Our study shows that KIM-1 staining sensitively and specifically identified proximal tubular injury and correlated with the degree of renal dysfunction. KIM-1 expression is more sensitive than histology for detecting early tubular injury, and its level of expression in transplant biopsies may indicate the potential for recovery of kidney function.