Abstract. Let X be a connected, noetherian scheme and A be a sheaf of Azumaya algebras on X which is a locally free OX -module of rank a. We show that the kernel and cokernel of Ki (X) → Ki (A) are torsion groups with exponent a m for some m and any i ≥ 0, when X is regular or X is of dimension d with an ample sheaf (in this case m ≤ d + 1). As a consequence, Ki(X, Z/m) ∼ = Ki(A, Z/m), for any m relatively prime to a.An Azumaya algebra over a scheme is a sheaf of algebra which is one (étale) extension away from being a full matrix algebra. This should indicate that the functors arising from linear algebra would be similar over the Azumaya algebra and its base algebra. In [CW] it was shown that this is the case for Hochschild homology (over affine schemes). The aim of this note is to show that we have a similar result for K-functors. Indeed, we will show that, when X is of dimension d with an ample sheaf, e.g. affine or quasi-projective, or X is regular, and A is a sheaf of Azumaya algebras on X that is a locally free O X -module of rank a, then K i (X) is isomorphic to K i (A) up to bounded a-torsion. In order to prove these results, we first show that the kernel and cokernel of K i (X) → K i (A) are torsion groups with exponent a m for some m. When A is free over O X , this is a straightforward argument using Morita theory. When A is locally free, and X is of finite dimension with an ample sheaf, we will use an extension of Bass' result on K-theory of rings to do this. An alternative argument is given when X is regular, where we use a Mayer-Vietoris sequence to piece together local results into a global one. One reason that we focus on kernel and cokernel of K i (X) → K i (A) is that even for i = 1 and A being a division algebra the cokernel gives a very interesting group with applications to the group structure of the algebra (see Remark 16).Here K i (A) is the Quillen K-theory of the exact category of sheaves of O X − locally free, left A-modules of finite type. If A is non-commutative, we define a locally free, left A-module to be a left A-module M such that M is locally free as an O X -module, and we use the category A-mod and the corresponding exact subcategory of locally free left A-modules to calculate G i (A) and K i (A) respectively. We follow the notation in [S] throughout this note. X and Y will always denote schemes, R and S commutative O X -algebras, and A and B possibly non-commutative O X -algebras that are locally free and of finite type as O X -modules. Tensor products are over O X unless otherwise indicated. If X is a scheme and A is a not necessarily commutative sheaf of O X -algebras, we follow standard notation and denote the category of left