Kidney transplantation has become increasingly common in major health centers making renal allograft evaluation through biopsy a common procedure. Early allograft dysfunction occurs in 30-50% of all transplants, while chronic graft failure is almost uniform at a rate of 2 to 4 % a year. Allograft biopsy remains the gold standard for the diagnosis of graft dysfunction. Rejection, albeit the most important, is only one of many causes of allograft dysfunction. The widely accepted Banff classification has set criteria for the diagnosis of acute and chronic rejection. The major differential diagnoses are acute ischemic injury, calcineurin inhibitor toxicity, both acute and chronic, infections, including pyelonephritis and polyomavirus nephropathy, chronic obstruction/reflux, hypertension, and recurrent and de novo disease. In this review, we outline the Banff criteria and their implications, the various causes of graft dysfunction, and discuss morphologic guidelines towards the various diagnoses.