INTRODUCTION: Young adolescent women in sub-Saharan Africa are three to four times more likely to be HIV-positive than boys or men. One of the relationship dynamics that is likely to be associated with young women's increased vulnerability to HIV is transactional sex. There are a range of HIV-related risk behaviours that may drive this vulnerability. However, to date, limited epidemiological data exist on the role of transactional sex in increasing HIV acquisition, especially among young women in sub-Saharan Africa. Our paper presents data on the prevalence of self-reported engagement in transactional sex and explores whether transactional sex is associated with increased risk of HIV infection among a cohort of young, rural, sexually active South African women. We also explore whether this relationship is mediated through certain HIV-related risk behaviours. METHODS: We analyzed baseline data from a phase III trial of conditional cash transfers for HIV prevention of 693 sexually active, school-going young women aged 13-20 years in rural South Africa. We examined the association between young women's engagement in transactional sex and HIV infection. Transactional sex is defined as a non-commercial, non-marital sexual relationship whereby sex is exchanged for money and/or gifts. We explored whether this relationship is mediated by certain HIV-related risk behaviours. We used logistic and multinomial regression and report unadjusted and adjusted odds ratios with 95% CI. RESULTS: Overall, 14% (n=97) of sexually active young women reported engaging in transactional sex. Engagement in transactional sex was associated with an increased risk of being HIV-positive (aOR: 2.5, CI: 95% 1.19-5.25, p=0.01). The effect size of this association remained nearly unchanged when adjusted for certain other dimensions of HIV risk that might help explain the underlying pathways for this relationship. CONCLUSIONS: This study provides quantitative support demonstrating that transactional sex is associated with HIV infection in young women. Even though the specific variables tested do not mediate the relationship, a potential explanation for this association may be that the men with whom young women are having sex belong to networks of sexually connected individuals who are at a "high risk" for HIV infection. The results highlight the importance of structural intervention approaches that can alter the context of young women's HIV risk.