Cytodiagnostic urinalysis was tested to determine its utility in the evaluation of allograft dysfunction in renal transplant patients. Specimens were prepared using the Papanicolaou stain on cytocentrifuge preparations of standardized quantities of urine. Differential counts of blood cells (neutrophils, lymphocytes, red cells), renal tubule cells (convoluted, collecting duct, necrotic), and casts (i.e. hemoglobin, renal tubule cell) were included in the sediment evaluation. Receiver operating characteristic curves demonstrated collecting duct cell exfoliation at 20 per 10 hpf to be a more sensitive and specific reflector of acute rejection than lymphocytes at their optimum decision point of 13 per 10 hpf. Sixty-four percent of cytodiagnostic urinalysis diagnoses preceded the clinical diagnoses. Ciclosporin nephrotoxicity was differentiated by the exfoliation of renal tubule convoluted cells in excess of collecting duct cells. The advantages of this technique over membrane-filter or phase-microscopic techniques for examining urine sediment of both transplant and nephrology patients include improved sensitivity and specificity in identification of sediment elements and reliable quantitative data for use in detecting renal disease and for monitoring therapy.