This paper reviews the transition experience in Eastern Europe from the viewpoint of the Fund. While starting conditions differed across countries, a common feature was the exceptional situation of crisis and vacuum which the transition strategy had to face. The basic three-pronged strategy of rapid liberalization, stabilization, and institution building proved to be correct, although actual progress has been more difficult than expected on the stabilization front and, especially, with institutional reforms. This paper examines selected issues in the transformation experience, including the unexpectedly large output decline, the ongoing debate on big-bang versus gradualist approaches, fiscal and social issues, enterprise governance, and exchange rate policy. It closes with a brief overview of the role of the IMF and some tentative conclusions and lessons that can be drawn at this stage. J. Comp. Econom., February 1995, 20(1), pp. 95-115. International Monetary Fund, Warsaw, Poland.