Kidney allografts are frequently lost due to alloimmunity. Still, the impact of early acute rejection (AR) on long-term graft survival is debated. We examined this relationship focusing on graft histology post-AR and assessing specific causes of graft loss. Included are 797 recipients without anti-donor antibodies (DSA) at transplant who had 1 year protocol biopsies. 15.2% of recipients had AR diagnosed by protocol or clinical biopsies. Compared to no-AR, all histologic types of AR led to abnormal histology in 1 and 2 years protocol biopsies, including more fibrosis + inflammation (6.3% vs. 21.9%), moderate/severe fibrosis (7.7% vs. 13.5%) and transplant glomerulopathy (1.4% vs. 8.3%, all p < 0.0001). AR were associated with reduced graft survival (HR = 3.07 (1.92–4.94), p < 0.0001). However, only those AR episodes followed by abnormal histology led to reduced graft survival. Early AR related to more late alloimmune-mediated graft losses, particularly transplant glomerulopathy (31% of losses). Related to this outcome, recipients with AR were more likely to have new DSA class II 1 year posttransplant (no-AR, 11.1%; AR, 21.2%, p = 0.039). In DSA negative recipients, early AR often leads to persistent graft inflammation and increases the risk of new DSA II production. Both of these post-AR events are associated with increased risk of graft loss.