Kidney cortical interstitial fibrosis is highly predictive of kidney prognosis and is currently assessed by evaluation of a biopsy. Diffusion-weighted magnetic resonance imaging is a promising non-invasive tool to evaluate kidney fibrosis. We recently adapted diffusion-weighted imaging sequence for discrimination between the kidney cortex and medulla and found that the cortico-medullary difference in apparent diffusion coefficient (ΔADC) correlated with histological interstitial fibrosis. Here, we assessed whether ΔADC as measured with diffusion-weighted magnetic resonance imaging is predictive of kidney function decline and dialysis initiation in chronic kidney disease (CKD) and patients with a kidney allograft in a prospective study encompassing 197 patients. We measured ΔADC in 43 patients with CKD (estimated GFR (eGFR) 55ml/min/1.73m²) and 154 patients with a kidney allograft (eGFR 53ml/min/1.73m²). Patients underwent a kidney biopsy and diffusion-weighted magnetic resonance imaging within one week of biopsy; median follow-up of 2.2 years with measured laboratory parameters. The primary outcome was a rapid decline of kidney function (eGFR decline over 30% or dialysis initiation) during follow up. Significantly, patients with a negative ΔADC had 5.4 times more risk of rapid decline of kidney function or dialysis (95% confidence interval: 2.29-12.58). After correction for kidney function at baseline and proteinuria, low ADC still predicted significant kidney function loss with a hazard ratio of 4.62 (95% confidence interval 1.56-13.67) independent of baseline age, sex, eGFR and proteinuria. Thus, low ΔADC can be a predictor of kidney function decline and dialysis initiation in patients with native kidney disease or kidney allograft, independent of baseline kidney function and proteinuria.