Complications associated with use of donor hepatitis C–positive kidneys (DHCV+) have been attributed primarily to posttransplantation liver disease (as a result of hepatitis C disease). The role of posttransplantation diabetes has not been explored in this setting. With the use of the United States Renal Data System database, 28,942 Medicare KT recipients were studied from January 1, 1996, through July 31, 2000. Cox proportional hazards regression models were used to calculate adjusted hazard ratios (AHR) for the association of sero-pairs for HCV (D+/R−, D+/R+, D−/R+ and D−/R−) with Medicare claims for de novo posttransplantation HCV and posttransplantation diabetes. The peak risk for posttransplantation HCV was in the first 6 mo after transplantation. The incidence of posttransplantation HCV after transplantation was 9.1% in D+/R−, 6.3% in D+/R+, 2.4% in D−/R+, and 0.2% in D−/R−. The incidence of posttransplantation diabetes after transplantation also peaked early and was 43.8% in D+/R−, 46.6% in D+/R+, 32.3% in D−/R+, and 25.4% in D−/R−. Associations for both complications were significant in adjusted analysis (Cox regression). Both posttransplantation HCV (AHR, 3.36; 95% confidence interval, 2.44 to 4.61) and posttransplantation diabetes (AHR, 1.81; 95% confidence interval, 1.54 to 2.11) were independently associated with an increased risk of death, but posttransplantation diabetes accounted for more years of life lost, particularly among recipients of DHCV+ kidneys. Posttransplantation diabetes may contribute substantially to the increased risk of death associated with use of DHCV+ kidneys and accounts for more years of life lost than posttransplantation HCV. Because HCV infection acquired after transplantation is so difficult to treat, methods that have been shown to reduce viral transmission warrant renewed attention.