Prospective studies of unselected indication biopsies from kidney transplants, combining conventional assessment with molecular analysis, have created a new understanding of transplant disease states and their outcomes. A large-scale Genome Canada grant permitted us to use conventional and molecular phenotypes to create a new disease classification. T cell-mediated rejection (TCMR), characterized histologically or molecularly, has little effect on outcomes. Antibody-mediated rejection (ABMR) manifests as microcirculation lesions and transcript changes reflecting endothelial injury, interferon-γ effects, and natural killer cells. ABMR is frequently C4d negative and has been greatly underestimated by conventional criteria. Indeed, ABMR, triggered in some cases by non-adherence, is the major disease causing failure. Progressive dysfunction is usually attributable to specific diseases, and pure calcineurin inhibitor toxicity rarely explains failure. The importance of ABMR argues against immunosuppressive drug minimization and stands as a barrier to tolerance induction. Microarrays also defined the transcripts induced by acute kidney injury (AKI), which correlate with reduced function, whereas histologic changes of acute tubular injury do not. AKI transcripts are induced in kidneys with late dysfunction, and are better predictors of failure than fibrosis and inflammation. Thus progression reflects ongoing parenchymal injury, usually from identifiable diseases such as ABMR, not destructive fibrosis.