Background. We investigated whether recipients of living donor grafts who suffer an acute rejection progress to graft loss because of chronic rejection at a slower rate than recipients of cadaveric grafts. Methods. A retrospective review was made of 296 renal transplantations performed at Mount Sinai Hospital. Only grafts functioning for at least 3 months were included in this analysis. Demographic variables of donor and recipient age, race, sex, and serum creatinine at 3 months after transplantation were compared between groups. Results. Among the acute rejection-free cohort, the estimated 5-year graft survival was 90% for those receiving transplants from living relatives and 88% for those receiving cadaveric transplants (P=0.76). However, in grafts with early acute rejection, the 5-year survival was 40% for cadaveric recipients compared with 73% for living related graft recipients (P<0.014). Using the proportional hazards model, cadaveric donor source, older donor age, African American recipient race, and elevated 3-month serum creatinine were independent predictors of long-term graft loss caused by chronic rejection. The severity of acute rejection and recipient age had no impact on the risk of graft loss because of chronic rejection. Conclusion. These data indicate that the benefit of living related transplantation results from the fact that a living related graft progresses from acute to chronic rejection at a slower rate than a cadaveric graft. Furthermore, a cadaveric graft that is free of acute rejection 3 months after transplantation has an equal likelihood of functioning at 5 years as that of a graft from a living related donor.