Purpose This study sought to characterize transformation incidence and outcome for patients with follicular lymphoma (FL) in a prospective observational series begun after diffusion of rituximab use. Patients and Methods Patients with newly diagnosed FL were prospectively enrolled onto the University of Iowa/Mayo Clinic Specialized Program of Research Excellence Molecular Epidemiology Resource from 2002 to 2009. Patients were actively followed for re-treatment, clinical or pathologic transformation, and death. Risk of transformation was analyzed via time to transformation by using death as a competing risk. Results In all, there were 631 patients with newly diagnosed grade 1 to 3a FL who had a median age at enrollment of 60 years. At a median follow-up of 60 months (range, 11 to 110 months), 79 patients had died, and 60 patients developed transformed lymphoma, of which 51 were biopsy proven. The overall transformation rate at 5 years was 10.7%, with an estimated rate of 2% per year. Increased lactate dehydrogenase was associated with increased risk of transformation. Transformation rate at 5 years was highest in patients who were initially observed and lowest in patients who initially received rituximab monotherapy (14.4% v 3.2%; P = .021). Median overall survival following transformation was 50 months and was superior in patients with transformation greater than 18 months after FL diagnosis compared with patients with earlier transformation (5-year overall survival, 66% v 22%; P < .001). Conclusion Follicular transformation rates in the immunochemotherapy era are similar to risk of death without transformation and may be lower than reported in older series. Post-transformation prognosis is substantially better than described in older series. Initial management strategies may influence the risk of transformation.