Rationale: Extensively drug-resistant (XDR) tuberculosis (TB) may arise in individuals on treatment for multidrug-resistant (MDR) TB. Preventing this amplification of resistance will likely improve clinical outcomes and delay the secondary spread of XDR-TB. Objectives: To measure the proportion of individuals that develops XDR-TB during the course of MDR-TB treatment, and to identify those factors associated with the development of XDR. Methods: We performed a retrospective analysis of 608 consecutive patients with documented MDR-TB who were started on MDR-TB treatment between September 10, 2000 and November 1, 2004 in the Tomsk Oblast TB Treatment Services in Western Siberia, Russian Federation. Measurements and Main Results: A total of 6% of patients were observed to develop XDR-TB while on MDR-TB treatment. These patients were significantly less likely to be cured or to complete treatment. Using Cox proportional hazard models, we found that the presence of bilateral and cavitary lesions was associated with a greater than threefold increase in hazard (adjusted hazard ratio [HR], 3.47; 95% confidence interval [CI], 1.32-9.14). Prior exposure to a secondline injectable antibiotic was associated with a greater than threefold increase in hazard (adjusted HR, 3.65; 95% CI, 1.81-7.37), and each additional month in which a patient failed to take at least 80% of their prescribed drugs was associated with nearly an additional 20% hazard of developing XDR-TB (adjusted HR, 1.17; 95% CI, 1.01-1.35). Conclusions: Early and rapid diagnosis, timely initiation of appropriate therapy, and programmatic efforts to optimize treatment adherence during MDR-TB therapy are crucial to avoiding the generation of excess XDR-TB in MDR-TB treatment programs.