Abstract: To determine the significance of early subclinical rejection of renal allografts, we reviewed 127 biopsy specimens obtained soon after transplantation. Histological finding was categorized according to a modification of the Banff scheme as: acute rejection (AR), borderline changes (BL); non-specific inflammatory changes, (NI) and no rejection (NR). Subclinical rejection was defined as AR, BL or NI. Patients with BL or NI were divided into two groups; one was treated with high-dose methylprednisolone (MP), the other remained untreated. Freedom from chronic allograft dysfunction (defined as non-doubling of serum creatinine 5 yr after transplantation) was significantly more frequent in the NR group (89%) than in the BL (70%) and AR (64%) groups. At 1 yr after transplantation, mean serum creatinine had increased significantly only in the untreated group (p < 0.05), and re-biopsy showed that interstitial fibrosis had developed to a significantly greater extent in the untreated group than in the treated group (p < 0.01). Subclinical rejection in the early protocol biopsies correlated closely with subsequent allograft dysfunction. High-dose MP treatment for early subclinical rejection may be effective in suppressing the development of interstitial fibrosis at 1 yr after transplantation.