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Background In mature generalized human immunodeficiency virus (HIV) epidemics, as survival from accessing antiretroviral treatment (ART) increases, HIV prevalence data may be suboptimal and difficult to interpret without HIV incidence rates.Objective To determine the HIV incidence rate among rural and urban women in KwaZulu-Natal, South Africa.Methods We conducted a prospective cohort study from March 2004 to May 2007. Volunteers were recruited from a rural family-planning clinic and an urban clinic for sexually transmitted infections. Consenting, HIV-uninfected women aged 14–30 years were enrolled. Demographic, clinical, sexual and behavioural data were collected using standardized questionnaires with HIV risk reduction counselling and HIV testing. Pelvic examinations were completed at quarterly visits.Results The HIV prevalence at screening was 35.7% [95% confidence interval (CI) 32.7–38.8] amongst rural women and 59.3% (95% CI 56.5–62.0) amongst urban women. A total of 594/2240 (26.5%) enrolled women contributed to 602 person-years (PYs) of follow-up. The median age was 22 years [inter-quartile range 18–23 years]. HIV incidence rate was 6.5/100 PY (95% CI 4.4–9.2) amongst rural women and 6.4/100 PY (95% CI 2.6–13.2) amongst urban women. HIV incidence rate of 17.2/100 PY (95% CI 2.1–62.2) was highest amongst urban women <20 years of age and 10.2/100 PY (95% CI 4.1–20.9) amongst rural women ≥25 years of age.Conclusion HIV incidence rates are devastatingly high in young women in rural and urban KwaZulu-Natal, despite reports of stabilized HIV prevalence observed in current surveillance data. The diffuse nature of the HIV epidemic underscores the urgent need to enhance HIV prevention and treatment modalities.