I have been working quite a bit with doing XSLT on some large XML files lately.
During this I worked with the XslCompiledTransform class in .NET, which make transformations really easy and it works very fast.

An advantage of this class is also that it enables you to utilize scripts within your XSLT file, which enables you to make for example C# functions, for various tasks. I’ll write more about that in a later blog entry to keep this one simple and to the point.

The syntax (in vb.net) for doing a transformation using XslCompiledTransform is as simple as the following:

    'Create settings which eanble scripting in the XSLT file
    Dim xmlSettings As New XsltSettings
    xmlSettings.EnableScript = True
    'create a XML reader for the XLST file
    Dim xsltFile As XmlReader = XmlReader.Create("XSLT FILE")
    'create a Transform object
    Dim xslTransform As New XslCompiledTransform
    'Load XSLT file with Settings into transform object
    xslTransform.Load(xsltFile, xmlSettings, Nothing)
    'Do the transformation.
    xslTransform.Transform("INPUT XML FILE", "OUTPUT XML FILE")  

The main disadvantage I’ve found for using this transformation is the huge memory usage it uses.
In my own situation, the process used about 3.5 times as much memory as my source XML file, meaning that a source file about 450MB my .NET process was killed on a 32 bit computer with an out of memory exception.

The actual memory usage will of course vary depending on how complex your transformation is, so the 3.5 number is not meant to be nothing more than an indicator that it is memory intensive.
It is however very fast, and I managed to transform very large files in a manner of seconds, thus if you can live with the memory consumption it is quite effective.