Inflammation, interstitial fibrosis (IF), and tubular atrophy (TA) precede chronic transplant dysfunction, which is a major cause of renal allograft loss. There is an association between IF/TA and loss of peritubular capillaries (PTCs) in advanced renal disease, but whether PTC loss occurs in an early stage of chronic transplant dysfunction is unknown. Here, we studied PTC number, IF/TA, inflammation, and renal function in 48 patients who underwent protocol biopsies. Compared with before transplantation, there was a statistically significant loss of PTCs by 3 months after transplantation. Fewer PTCs in the 3-month biopsy correlated with high IF/TA and inflammation scores and predicted lower renal function at 1 year. Predictors of PTC loss during the first 3 months after transplantation included donor type, rejection, donor age, and the number of PTCs at the time of implantation. In conclusion, PTC loss occurs during the first 3 months after renal transplantation, associates with increased IF and TA, and predicts reduced renal function.