Background Randomised placebo-controlled trials have shown that daily oral pre-exposure prophylaxis (PrEP) with tenofovir-emtricitabine reduces the risk of HIV infection. However, this benefit could be counteracted by risk compensation in users of PrEP. We did the PROUD study to assess this effect. Methods PROUD is an open-label randomised trial done at 13 sexual health clinics in England. We enrolled HIV-negative gay and other men who have sex with men who had had anal intercourse without a condom in the previous 90 days. Participants were randomly assigned (1:1) to receive daily combined tenofovir disoproxil fumarate (245 mg) and emtricitabine (200 mg) either immediately or after a deferral period of 1 year. Randomisation was done via web-based access to a central computer-generated list with variable block sizes (stratified by clinical site). Follow-up was quarterly. The primary outcomes for the pilot phase were time to accrue 500 participants and retention; secondary outcomes included incident HIV infection during the deferral period, safety, adherence, and risk compensation. The trial is registered with ISRCTN (number ISRCTN94465371) and ClinicalTrials.gov (NCT02065986). Findings We enrolled 544 participants (275 in the immediate group, 269 in the deferred group) between Nov 29, 2012, and April 30, 2014. Based on early evidence of effectiveness, the trial steering committee recommended on Oct 13, 2014, that all deferred participants be offered PrEP. Follow-up for HIV incidence was complete for 243 (94%) of 259 patient-years in the immediate group versus 222 (90%) of 245 patient-years in the deferred group. Three HIV infections occurred in the immediate group (1·2/100 person-years) versus 20 in the deferred group (9·0/100 person-years) despite 174 prescriptions of post-exposure prophylaxis in the deferred group (relative reduction 86%, 90% CI 64-96, p=0·0001; absolute difference 7·8/100 person-years, 90% CI 4·3-11·3). 13 men (90% CI 9-23) in a similar population would need access to 1 year of PrEP to avert one HIV infection. We recorded no serious adverse drug reactions; 28 adverse events, most commonly nausea, headache, and arthralgia, resulted in interruption of PrEp. We detected no difference in the occurrence of sexually transmitted infections, including rectal gonorrhoea and chlamydia, between groups, despite a suggestion of risk compensation among some PrEP recipients. Interpretation In this high incidence population, daily tenofovir-emtricitabine conferred even higher protection against HIV than in placebo-controlled trials, refuting concerns that effectiveness would be less in a real-world setting. There was no evidence of an increase in other sexually transmitted infections. Our findings strongly support the addition of PrEP to the standard of prevention for men who have sex with men at risk of HIV infection. Funding MRC Clinical Trials Unit at UCL, Public Health England, and Gilead Sciences.