Standard methods for detecting chronic lung allograft dysfunction (CLAD) and rejection have poor sensitivity and specificity and have conventionally required bronchoscopies and biopsies. Plasma cell-free DNA (cfDNA) has been shown to be increased in various types of allograft injury in transplant recipients and CXCL10 has been reported to be increased in the lung tissue of patients undergoing CLAD. This study used a novel cfDNA and CXCL10 assay to evaluate the noninvasive assessment of CLAD phenotype and prediction of survival from bronchoalveolar lavage (BAL) fluid. A total of 60 BAL samples (20 with bronchiolitis obliterans (BOS), 20 with restrictive allograft syndrome (RAS), and 20 with stable allografts (STA)) were collected from 60 unique lung transplant patients; cfDNA and CXCL10 were measured by the ELISA-based KIT assay. Median cfDNA was significantly higher in BOS patients (6739 genomic equivalents (GE)/mL) versus STA (2920 GE/mL) and RAS (4174 GE/mL) (p < 0.01 all comparisons). Likelihood ratio tests revealed a significant association of overall survival with cfDNA (p = 0.0083), CXCL10 (p = 0.0146), and the interaction of cfDNA and CXCL10 (p = 0.023) based on multivariate Cox proportional hazards regression. Dichotomizing patients based on the median cfDNA level controlled for the mean level of CXCL10 revealed an over two-fold longer median overall survival time in patients with low levels of cfDNA. The KIT assay could predict allograft survival with superior performance compared with traditional biomarkers. These data support the pursuit of larger prospective studies to evaluate the predictive performance of cfDNA and CXCL10 prior to lung allograft failure.