During the past 10 years, the success of renal allograft transplantation has remarkably increased. Today, chronic rejection or chronic allograft nephropathy (CAN) is the major obstacle to long-term allograft survival. Chronic allograft nephropathy is characterized by renal fibrosis with vascular obliteration and replacement of normal tissues with excessive matrix deposition. Although the cause of CAN is not clear, most likely transforming growth factor-β, a powerful prosclerotic cytokine/growth factor, plays an important role in its pathogenesis. Transforming growth factor-β is the major intercellular signal responsible for increased production of matrix components, such as collagen and fibronectin, and inhibitors of matrix degradation, such as plasminogen activator inhibitor. Many factors, including cyclosporine, increase the expression of transforming growth factor-β within renal tissues, promoting the expression of CAN. This review focuses on current advances in understanding the biology, signaling mechanisms, and genetics of transforming growth factor-β as they relate to development of CAN.