OBJECTIVES: Graft rejection episodes are important causes of hospitalization in post-kidney transplant patients. The aim of this study is to analyze the incidence of rejection episodes (REs) requiring hospitalization after renal transplant, associated resource use and costs for the Brazilian Public Health System. METHODS: This is a longitudinal study combining data from two government databases (Outpatient and Inpatient Information Systems - SIA/DATASUS and SIH/DATASUS) connected by deterministic linkage. Diagnosis of REs was done by International Classification of Diseases (ICD-10) indicated on hospitalization. Kidney transplant patients from 7 hospitals in Brazil in 2004 with at least one additional database record were followed for 60 months post-transplant. Duration of hospitalization, resource use and costs converted to 2004 USD of all REs were collected. Kaplan-Meier curves for the first episode categorized by type of donor were calculated. RESULTS: From 1044 kidney transplant patients recorded in the database, 797 (410 deceased and 387 living) were eligible to the analysis. Proportion of patients that have not experienced any RE at 12, 24, and 60 months were 73.2%; 69.6%; and 60.1% in the living group and 72.1%; 70.0% and 66.0% in the deceased group. Kaplan-Meier curves, average length of stay (10.1±8.2 days in the living group and 8.9±8.5 days in the deceased group) and costs (US$715±874 in the living group and US$651±1,012 in the deceased group) of REs hospitalizations were not statistically different (p>0.05). Total hospitalization costs were US$480,585. Hospital services (ICU/Ward days, operation room, equipments, etc) represent the most significant portion of costs (43.1%), followed by diagnostic/laboratory tests (26.1%). Among transplant-related medications, tacrolimus, OKT3 and basiliximab accounted, respectively, for 4.4%, 2.2% and 1.1% of total expenses. CONCLUSIONS: A total of 73% of kidney transplanted patients did not have REs in the first year post-transplant. Type of donor does not seem to influence occurrence, costs or duration of hospitalization.