Among patients with bipolar disorder, discordant findings have been published on the nephrotoxic effects of lithium therapy. To quantify absolute and relative risks of chronic kidney disease (CKD) progression and acute kidney injury (AKI) in people who initiated lithium compared with valproate therapy and to investigate the association between cumulative use and elevated lithium levels and kidney outcomes. This cohort study had a new-user active-comparator design and used inverse probability of treatment weights to minimize confounding. Included patients initiated therapy with lithium or valproate from January 1, 2007, to December 31, 2018, and had a median follow-up of 4.5 years (IQR, 1.9-8.0 years). Data analysis began in September 2021, using routine health care data from the period 2006 to 2019 from the Stockholm Creatinine Measurements project, a recurrent health care use cohort of all adult residents in Stockholm, Sweden. New use of lithium vs new use of valproate and high (>1.0 mmol/L) vs low serum lithium levels. Progression of CKD (composite of >30% decrease relative to baseline estimated glomerular filtration rate [eGFR] and kidney failure), AKI (by diagnosis or transient creatinine elevations), new albuminuria, and annual eGFR decrease. Outcomes by attained lithium levels were also compared in lithium users. The study included 10 946 people (median [IQR] age, 45 [32-59] years; 6227 female [56.9%]), of whom 5308 initiated lithium therapy and 5638 valproate therapy. During follow-up, 421 CKD progression events and 770 AKI events were identified. Compared with patients who received valproate, those who received lithium did not have increased risk of CKD (hazard ratio [HR], 1.11 [95% CI, 0.86-1.45]) or AKI (HR, 0.88 [95% CI, 0.70-1.10]). Absolute 10-year CKD risks were low and similar: 8.4% in the lithium group and 8.2% in the valproate group. No difference in the risk of developing albuminuria or the annual rate of eGFR decrease was found between groups. Among more than 35 000 routine lithium tests, only 3% of results were in the toxic range (>1.0 mmol/L). Lithium values greater than 1.0 mmol/L, compared with lithium values of 1.0 mmol/L or less, were associated with increased risk of CKD progression (HR, 2.86; 95% CI, 0.97-8.45) and AKI (HR, 3.51; 95% CI, 1.41-8.76). In this cohort study, compared with new use of valproate, new use of lithium was meaningfully associated with adverse kidney outcomes, with low absolute risks that did not differ between therapies. However, elevated serum lithium levels were associated with future kidney risks, particularly AKI, emphasizing the need for close monitoring and lithium dose adjustment.