BACKGROUND: The monoclonal antibody trastuzumab has survival benefit when given with chemotherapy to patients with early, operable, and metastatic breast cancer that has HER2 (also known as ERBB2) overexpression or amplification. We aimed to assess event-free survival in patients with HER2-positive locally advanced or inflammatory breast cancer receiving neoadjuvant chemotherapy with or without 1 year of trastuzumab. METHODS: We compared 1 year of treatment with trastuzumab (given as neoadjuvant and adjuvant treatment; n=117) with no trastuzumab (118), in women with HER2-positive locally advanced or inflammatory breast cancer treated with a neoadjuvant chemotherapy regimen consisting of doxorubicin, paclitaxel, cyclophosphamide, methotrexate, and fluorouracil. Randomisation was done with a computer program and minimisation technique, taking account of geographical area, disease stage, and hormone receptor status. Investigators were informed of treatment allocation. A parallel cohort of 99 patients with HER2-negative disease was included and treated with the same chemotherapy regimen. Primary endpoint was event-free survival. Analysis was by intention to treat. This study is registered, number ISRCTN86043495. FINDINGS: Trastuzumab significantly improved event-free survival in patients with HER2-positive breast cancer (3-year event-free survival, 71% [95% CI 61-78; n=36 events] with trastuzumab, vs 56% [46-65; n=51 events] without; hazard ratio 0.59 [95% CI 0.38-0.90]; p=0.013). Trastuzumab was well tolerated and, despite concurrent administration with doxorubicin, only two patients (2%) developed symptomatic cardiac failure. Both responded to cardiac drugs. INTERPRETATION: The addition of neoadjuvant and adjuvant trastuzumab to neoadjuvant chemotherapy should be considered for women with HER2-positive locally advanced or inflammatory breast cancer to improve event-free survival, survival, and clinical and pathological tumour responses. FUNDING: F Hoffmann-La Roche.