We studied the significance of microcirculation inflammation in kidney transplants, including 329 indication biopsies from 251 renal allograft recipients, who were mostly nonpresensitized (crossmatch negative). Glomerulitis (g) and peritubular capillaritis (ptc) were often associated with antibody-mediated rejection (65% and 75%, respectively), but were also found in other diseases in the absence of donor-specific antibody (DSA): T-cell-mediated rejection (ptc, g), glomerulonephritis (g) and acute tubular necrosis (ptc). To develop rules for reducing the nonspecificity of microcirculation inflammation and defining the best grading thresholds associated with DSA, we built and validated a decision tree to predict DSA. The decision tree revealed that g + ptc sum (addition of g-score plus ptc-score) was the best predictor of DSA, followed by time posttransplant, then C4d, which had a small role. Late biopsies with g + ptc > 0 showed higher frequency of DSA compared to early biopsies with g + ptc > 0 (79% vs. 27%). Microcirculation inflammation in early biopsies was often false positive (antibody-independent). The decision tree predicted DSA with higher sensitivity and accuracy than C4d staining. Microcirculation inflammation sum score predicted graft failure independently of time, C4d and transplant glomerulopathy. Thus any degree of microcirculation inflammation in late kidney transplant biopsies strongly indicates presence of DSA and predicts progression to graft failure.