Yesterday it took me several hours to figure out how to get XslTransform work with output-escaping. I had thought, it should not be a problem to implement it based on my experiences with our intranet app. It uses .asp to get some xml from a BL Layer and transform it using the MSXML Parser and some xslt. There I can transform a DOM and get back a DOM and output-escaping is not a problem. Now moved it up to .NET XslTransform it does not work this way. Thanks to Prajakta Joshi [@microsoft.com] 's post I have learned to use a Stream as output, then read the stream back with StreamReader to get the string I need. Has that to be?