It is generally accepted that compared with dialysis, transplantation is more advantageous for the treatment of ESRD in terms of patient quality of life and costs to the health care system. Although the cost of the transplantation procedure is significant, the annual maintenance costs required to keep a functioning graft healthy are much less than the annual cost of dialysis. Approximately 4 to 5 years after transplant, the total cumulative cost of transplantation falls below the cumulative cost of dialysis. However, the cost of maintaining a functioning graft can increase dramatically if acute rejection occurs because of inadequate immunosuppression. Treatment of acute rejection can involve hospitalization and the administration of additional immunosuppressive drugs. In addition, it has been hypothesized that the incidence of acute rejection is the best predictor for the eventual occurrence of chronic rejection and subsequent graft loss. Therefore, the morbidity, mortality, and increased costs associated with acute rejection provide a sound clinical and economic rationale for attempting to lower the incidence of acute renal allograft rejection. New maintenance immunosuppression protocols can improve graft survival rates and continue to widen the gap between the long-term cost of transplantation versus dialysis. Improved graft survival also allows more patients on the waiting list to take advantage of the availability of scarce organs. Finally, it should be clear that economic evaluations of immunosuppressive agents that provide improved rejection rates and other clinical benefits should consider not only short-term impacts but also long-term cost-effectiveness.