Chronic allograft nephropathy (CAN) is due to both immunologic and non-immunologic factors and results in the development of nonspecific pathologic features that may even be present in long-term well-functioning renal allografts. To investigate the natural history of CAN and potential risk factors associated with progression of these histologic lesions, this study evaluated the of histologic alterations of 124 sequential protocol biopsies performed at 2, 3, and 5 yr after transplantation in 46 patients who exhibited histologic evidence of CAN in the 1-yr biopsy. The occurrence of late acute rejection (AR) greater than 4 mo posttransplant was significantly associated with the development of histologic CAN. In contrast, early clinical AR occurring within 3 mo had no impact on the subsequent development of CAN at 1 yr. Subclinical AR was evident in association with CAN in 50%, 32%, 19%, and 16% of cases with CAN at 1, 2, 3, and 5 yr, respectively. These acute lesions correlated significantly with histologic progression defined as an increased CADI score of the follow-up biopsies. Furthermore, a group of patients who exhibited repeated subclinical AR in the sequential follow-up biopsies had a lower creatinine clearance at 5 yr after transplantation and worse long-term graft survival. In contrast, the absence of evidence of acute inflammation in association with CAN at any time point was associated with minimal deterioration in renal function or progression of renal lesions during the observation period. These results suggest that the persistence of chronic active inflammation may be responsible for the histologic progression of CAN.