Depletional induction therapies are routinely used to prevent acute rejection and improve transplant outcome. The effects of depleting agents on T‐cell subsets and subsequent T‐cell reconstitution are incompletely defined. We used flow cytometry to examine the effects of rabbit antithymocyte globulin (rATG) on the peripheral T‐cell repertoire of pediatric and adult renal transplant recipients. We found that while rATG effectively depleted CD45RA+CD27+ naïve and CD45RO+CD27+ central memory CD4+ T cells, it had little effect on CD45RO+CD27− CD4+ effector memory or CD45RA+CD31−, CD45RO+CD27+ and CD45RO+CD27− CD8+ T cell subsets. When we performed a kinetic analysis of CD31+ recent thymic emigrants and CD45RA+/RO+ T cells, we found evidence for both thymopoiesis and homeostatic proliferation contributing to immune reconstitution. We additionally examined the impact of rATG on peripheral CD4+Foxp3+ T cells. We found that in adults, administration of rATG‐induced peripheral expansion and new thymic emigration of T cells with a Treg phenotype, while CD4+Foxp3+ T cells of thymic origin predominated in children, providing the first evidence that rATG induces Treg in vivo. Collectively our data indicate that rATG alters the balance of regulatory to memory effector T cells posttransplant, providing an explanation for how it positively impacts transplant outcome. This prospective study examines the contribution of thymopoiesis versus homeostatic proliferation to immune reconstitution following rATG and the influence of rATG on the emergence of Treg in renal transplant recipients.