This article reports the results of an experiment designed to assess the impact of lastsale trade reporting on the liquidity of BBB corporate bonds. Overall, adding transparency has either a neutral or a positive effect on liquidity. Increased transparency is not associated with greater trading volume. Except for very large trades, spreads on newly transparent bonds decline relative to bonds that experience no transparency change. However, we find no effect on spreads for very infrequently traded bonds. The observed decrease in transaction costs is consistent with investors’ ability to negotiate better terms of trade once they have access to broader bond-pricing data. (JEL codes: G14, G18, G23, G24, G28) Although larger than the market for US Government or municipal bonds, the corporate bond market historically has been one of the least transparent securities markets in the United States, with neither pretrade nor posttrade transparency. Corporate bonds trade primarily over-the-counter, and until recently, no centralized mechanism existed to collect and disseminate posttransaction information. This structure changed on July 1, 2002, when the National Association of Securities Dealers (NASD) began a program of increased posttrade transparency for corporate bonds, known as the Trade Reporting and Compliance Engine (TRACE) system. As part of this structural change, only a selected subset of bonds initially was subject to public dissemination of trade information. The resulting experiment enables us to observe the effects of increased posttrade transparency on market liquidity in a controlled setting.