Abstract: All changes in government policy - the passage of legislatior, judicial decisions, administrative rulings, and takings of property - impose gains and losses on those who, prior to the change, had taken actions with long- term consequences. Transition policy concerns whether, to what extent, and in what manner the impacts of policy change upon preexisting investments should be compensated or otherwise mitigated. In this Article, Professor Kaplow analyzes legal transitions from an economic perspective and argues that uncertainty concerning government action is in many respects like other types of uncertainty. Because the market is normally left to strike the appropriate balance between mitigating risk and preserving incentives, relying on the market to address the effects of changes in government policy seems more efficient than the provision of transitional relief by the govern- ment. Current practice provides no relief from some sources of government uncertainty, such as the evolution of common law liability rules, but it does provide widespread transitional relief in connection with takings, tax reform, and deregulation. The Article examines the similarities in the economic impacts of these reforms and explores the extent to which institutional and fairness considerations justify departures from the most economically efficient transition policy.