538 Histological findings in pancreatectomies from failed grafts (ressumption of insulin therapy with no evidence of insulin resistance) are well established. These are extensive fibrosis with proportional loss of the exocrine component and marked transplant arteriopathy. The purpose of this study is to describe the morphological features of the different stages of chronic allograft rejection (CR) in serial biopsies. Out of 252 technically successful pancreas transplants 18 grafts were lost to CR after a mean follow up of 21 months. 9 of these grafts had histological evidence of CR in serial biopsies. These 48 biopsies were done due to acute allograft dysfunction 3 to 38 months (mean 14 months) post-transplant. Each patient had 3-7 biopsies(mean 4.1) Clinical follow-up for 11 to 36 months (mean 22.6 months) included serial serum enzyme and glucose determinations. CR was graded as 0 (no fibrosis), I (accentuation of fibrous septa with only focal evidence of acinar atrophy in the periphery of the lobules), II (fibrous septa representing 30-40% of the needle core and acinar atrophy affecting most lobular areas), III (fibrous septa representing > 50% of the tissue core and marked acinar atrophy) and IV (fibrous tissue with isolated acini or islets). Transplant arteriopathy was seen depending on the sample. The histological findings were compared to 30 protocol biopsies performed at 3-19 months (mean 11) from 22 patients with normal graft function after 6-24 months of follow up (mean 14 months). The protocol biopsies from normal functioning grafts were grade 0 (22) and grade I (8). The biopsies (n=48) from failed grafts were 13 grade II, 22 grade III and 13 grade IV. Increase in septal fibrosis was seen in all cases starting at 4-19 months (mean 9 months) with all grafts showing grade III or IV biopsies 6-8 months before graft loss. Pancreatectomy specimens available in 4 patients showed findings correlating with the last needle biopsy. Concurrent acute allograft rejection(mixed inflammatory infiltrates, venous and arterial endotheliitis, arteritis and acinar cell damage) was seen in 87% of the biopsies. In conclusion, progressive fibrosis and acinar loss consistent with developing CR can be seen early in the post-transplant course and may progress to graft failure. These findings may be predictive of ultimate graft failure.