A cohort study involving 60 human immunodeficiency virus (HIV)-negative male transvestite commercial sex workers (CSWs) was conducted in Montevideo, Uruguay in 1999-2001. Serum samples were tested for HIV by an enzyme-linked immunosorbent assay screening with immunoblot confirmation. Six participants seroconverted for an incidence-density rate of 6.03 (95% confidence interval = 2.21-13.12) per 100 person-years. Inconsistent condom use during client sex (adjusted hazard ratio [AHR] = 6.7), during oral sex (AHR = 5.6), and at the last sexual encounter (AHR = 7.8), and use of marihuana (AHR = 5.4) were marginally associated with HIV seroconversion. Five samples were genotyped in the protease and reverse transcriptase regions; three were subtypes B and two were BF recombinants. Full genome analysis of four samples confirmed all three subtype B samples and one of the two BF recombinants. Male transvestite CSWs sustained a high rate of HIV infection. Larger prospective studies are required to better define subtypes and associated sexual and drug-related risk factors.