Chronic allograft nephropathy (CAN) is a common finding in kidney grafts with functional impairment. Prolonged hypothermic storage-induced ischemia-reperfusion injury is associated with the early onset of CAN. As the noble gas xenon is clinically used as an anesthetic and has renoprotective properties in a rodent model of ischemia-reperfusion injury, we studied whether early treatment with xenon could attenuate CAN associated with prolonged hypothermic storage. Exposure to xenon enhanced the expression of insulin growth factor-1 (IGF-1) and its receptor in human proximal tubular (HK-2) cells, which, in turn, increased cell proliferation. Xenon treatment before or after hypothermia-hypoxia decreased cell apoptosis and cell inflammation after reoxygenation. The xenon-induced HK-2 cell proliferation was abolished by blocking the IGF-1 receptor, mTOR, and HIF-1α individually. In the Fischer-to-Lewis rat allogeneic renal transplantation model, xenon exposure of donors before graft retrieval or recipients after engraftment enhanced tubular cell proliferation and decreased tubular cell death and cell inflammation associated with ischemia-reperfusion injury. Compared with control allografts, xenon treatment significantly suppressed T-cell infiltration and fibrosis, prevented the development of CAN, and improved renal function. Thus, xenon treatment promoted recovery from ischemia-reperfusion injury and reduced susceptibility to the subsequent development of CAN in allografts.