The biological effects of SARS-CoV-2 infection in transplanted kidneys are uncertain with little pathological information. This single-center, prospective observational study evaluated kidney transplant biopsies from recipients of deceased donors with COVID-19, current recipients contracting SARS-CoV-2 Omicron variant in 2022, against prior BK virus (BKV) infection and uninfected (without SARS-CoV-2 or BKV) samples, as respective positive and negative comparators (n = 503 samples). We demonstrated nonvirus tubular injury in implanted tissue from infected donors and prevalent recipients with mild acute COVID-19 and acute kidney injury, excluding direct viral infection as a cause of kidney damage. COVID particles were absent in 4116 ultrastructural images of 295 renal tubules from 4 patients with acute COVID-19. No viral cytopathic effect, viral allograft nephropathy, or SARS-CoV-2 RNA was detected in acute tissues, nor in 128 sequential samples from infected donors or recipients with COVID-19. Following recipient COVID-19 (mean 16.8 ± 12.0 wk post-infection), the biopsy-prevalence of rejection was 33.0% (n = 100 biopsies) versus 13.4% for contemporaneous uninfected controls (n = 337; P < 0.001). Prior COVID-19 was an independent risk factor for incident rejection using multivariable generalized estimating equation adjusted for competing risks (odds ratio, 2.195; 95% confidence interval, 1.189-4.052; P = 0.012). Landmark and matched-pair analyses confirmed an association of SARS-CoV-2 with subsequent transplant rejection, with a similar pattern following BKV infection. Transplantation from COVID-19+ deceased donors yielded good recipient outcomes without evidence of viral tissue transmission. Acute kidney injury during COVID-19 was mediated by archetypical tubular injury and infection correlated with an increased risk of subsequent rejection.