OBJECTIVE The kinetics and risk factors of diabetic nephropathy after kidney transplantation remain unclear. This study investigated the posttransplant occurrence of diabetic nephropathy and the contribution of posttransplant glycemic control. RESEARCH DESIGN AND METHODS We performed a single-center prospective cohort study of 953 renal allograft recipients and 3,458 protocol-specified renal allograft biopsy specimens up to 5 years after transplantation. The effects of pretransplant diabetes and glycemic control (glycated hemoglobin levels) on the posttransplant histology were studied. RESULTS Before transplantation, diabetes was present in 164 (17.2%) renal allograft recipients, primarily type 2 (n = 146 [89.0%]). Despite intensive glycemic control (glycated hemoglobin 7.00 ± 1.34% [53 ± 14.6 mmol/mol], 6.90 ± 1.22% [52 ± 13.3 mmol/mol], and 7.10 ± 1.13% [54 ± 12.4 mmol/mol], at 1, 2, and 5 years after transplantation), mesangial matrix expansion reached a cumulative incidence of 47.7% by 5 years in the pretransplant diabetes group versus 27.1% in patients without diabetes, corresponding to a hazard ratio of 1.55 (95% CI 1.07–2.26; P = 0.005). Mesangial matrix expansion was not specific for diabetic nephropathy and associated independently with increasing age. Pretransplant diabetes was associated with posttransplant proteinuria but not with estimated glomerular filtration rate, graft failure, or any other structural changes of the glomerular, vascular, or tubulointerstitial renal compartments. The occurrence of diabetic nephropathy was independent of posttransplant glycated hemoglobin levels. CONCLUSIONS Mesangial matrix expansion, an early indicator of diabetic nephropathy, can occur rapidly in patients with diabetes before transplantation, despite intensive glycemic control. Prevention of diabetic nephropathy requires more than pursuing low levels of glycated hemoglobin.