Nephropathy due to BK virus (BKV) infection is an evolving challenge in patients undergoing hematopoietic stem cell transplantation (HSCT). We hypothesized that BKV infection was a marker of kidney function decline and a poor prognostic factor in HSCT recipients who experience this complication. In this retrospective study, we analyzed all patients who underwent their first allogeneic HSCT at our institution between 2004 and 2012. We evaluated the incidence of persistent kidney function decline, which was defined as a confirmed reduction in estimated glomerular filtration rate of at least 25% from baseline using the Chronic Kidney Disease Epidemiology equation. Cox proportional hazard regression was used to model the cause-specific hazard of kidney function decline, and the Fine-Gray method was used to account for the competing risks of death. Among 2477 recipients of a first allogeneic HSCT, BK viruria was detected in 25% (n = 629) and kidney function decline in 944 (38.1%). On multivariate analysis, after adjusting for age, sex, acute graft-versus-host disease (GVHD), chronic GVHD, preparative conditioning regimen, and graft source, BK viruria remained a significant risk factor for kidney function decline (p < 0.001). In addition, patients with BKV infection and kidney function decline experienced worse overall survival. After allogeneic HSCT, BKV infection was strongly and independently associated with subsequent kidney function decline and worse patient survival after HSCT.