In this prospective, randomized clinical trial, we examined the clinical benefits of steroid avoidance following renal transplantation. In order to assess therapeutic efficacy and improve outcomes, we performed protocol biopsies at 1, 6 and 12 months to assess intra-allograft events and guide immunosuppressive therapy. Patients were randomized into two groups: early steroid withdrawal (SW, n=27) or steroid control (SC, n=26). Demographic characteristics were equivalent in both groups except that SC patients had fewer HLA mismatches (SC 2.7 vs. SW 3.9, p=0.02). Both groups received Thymoglobulin (Total dose: SW=3.41.2, SC=3.31.1 mg/kg), tacrolimus (TAC), mycophenolate mofetil (MMF) and steroids (250 mg/iv day 0 and 125 mg/iv day 1). The SC group received prednisone starting at 30 mg/d on day 2, tapered to 5 mg/d by day 30 and continued indefinitely. The SW group received prednisone 30 mg/d on day 2 that was tapered by 5 mg/d and discontinued on day 7. Clinical rejections occurred in 3 SW patients (11%) (Grade 1A, 1B and Borderline) and 3 SC patients (12%) (3 Borderline) all of which responded to steroids (p=NS). At one year, renal function was well preserved in both groups (SC 75.1 25.4 vs. SW 76.7 30.7 ml/min p=NS). In the SC group, 7 of 45 protocol biopsies showed borderline rejection with the remaining being normal. One patient was treated with steroids. In the SW group, 4 of 46 protocol biopsies showed rejection (3 borderline, 1 Grade 2A) one of which required a change in therapy. Five biopsies revealed unsuspected tacrolimus toxicity and 1 showed cholesterol emboli necessitating a change in immunosuppression in 3 patients. At one year, 82%of SC and 86% of SW biopsies showed absent or minimal fibrosis (p=NS). Fewer patients in the SW arm had significant bone loss at 1 mo. (SC 61% vs. SW 14% p=0.007) or required lipid lowering therapy (SC 89% vs. SW 22%, p=0.004). Thus, a short course of Thymoglobulin induction combined with TAC and MMF prevented clinical and subclinical rejection allow for safe steroid withdrawal without increasing the risk of graft fibrosis. SW patients enjoyed equivalent graft function with less bone loss and hyperlipidemia. Only 5% of protocol biopsies identified patients requiring a change in therapy. When conducting clinical trials of minimizing immunosuppression, protocol biopsies provide an additional assessment of safety and efficacy.