Early changes contributes to late graft loss in live related setting, but has not received enough attention. We have studied early morphological changes in dysfunctional grafts of live related recipients and have analyzed the associated risk factors. A retrospective study of live related renal transplant recipients, transplanted between January 2002 and December 2004 at Sindh Institute of Urology and Transplantation with a minimum follow-up of 1 year was performed. Patients with biopsy changes of chronic allograft nephropathy (CAN) within 18 months of transplantation (CAN group) were studied and compared with patients who had at least one biopsy, no CAN in any biopsy, and subsequent stable function in the same period (No CAN group). Forty two (25.6%) of 164 biopsied patients showed CAN within 18 months of transplantation. The earliest time for CAN development was three months. There was no difference in HLA matching, early graft function, and immunosuppressive regime between the two groups. Acute rejection occurred with similar frequency (31% in CAN group vs. 20.5% in No CAN group, p = 0.10) Subjects developing CAN were more frequently males (90.5%) vs. (74.4%) compared to No CAN group (p=0.02). CAN group had higher creatinine at first discharge compared to No CAN group 1.5 ± 0.71 mg/dl vs 1.31 ± 0.31 mg/dl respectively (p=0.02). CAN patients continued to show higher creatinine 1.6 ± 0.5 mg/dl compared to No CAN group 1.4 ± 0.4 mg/dl at three months (p = 0.01) and subsequently. CMV infection and Polyoma were more frequently (13.2% and 14.3% respectively) in the CAN group compared to No CAN group (0.8% and 0.8% respectively) (p = 0.001 & p = 0.0001 respectively). Serum creatinine from early post-transplant period is a good predictor of subsequent CAN in living related transplant and non-immunological factors probably play an important role.