Latent variable interpretation of transplant rejection. True disease states are “latent variables” that can seldom be known with absolute certainty. Observable measurements (“manifestations”: histologic, clinical, and molecular data) of the underlying diseases are used to assign a diagnosis. The Banff system uses histologic lesions + DSA + C4d (step 1) to make diagnoses using consensus rules/expert opinion (step 2). MMDx measures gene expression (step 1) to assign disease states/probabilities (step 2) using: (A) scores from supervised methods—classifiers based on correlations/associations between gene expression and histologic diagnoses/lesion scores, and (B) unsupervised methods combining scores from (A) and gene set (PBT) scores. Once in place, both Banff and MMDx require only 1 type of data to assign diagnoses in new samples—histology/DSA for Banff, and gene expression for MMDx. AMR, antibody-mediated rejection; DSA, donor-specific antibody; MMDx, Molecular Microscope Diagnostic System; PBT, pathogenesis-based transcript; TCMR, T cell–mediated rejection.