What would constitute a "trasitional lifeform" for you?
In terms of evolution, ALL populations of organisms are in transition, all the time.
We've got some pretty unbroken lines of development, for example the
evolution of the horse or the
evolution of cetaceans (whales, dolphins and porpoises).
Dinosaurs weren't reptiles, exactly.
Our genetic code isn't utterly deterministic. Even monozygotic twins are nowhere near identical, especially as their life progresses. Changes do happen, all the time. And under the right conditions, some of them may prove to be an evolutionary advantage under certain circumstances. (Our species is pretty "young", and yet you'll find that some populations - those that have been cowherds for millennia - can digest cow's milk, while others - those who haven't been cowherds - cannot. That's evolution at work, right in front of our eyes.)
The whole purpose of DNA is to encode enzymes: protein chains of various purposes. It's our "programming", so to speak - including glitches, bugs, and some surprising variations.
From the time the first enzyme chains gathered in a meaningful pattern, that development was pretty much inevitable.
To this day, monocellular organisms make up the vast majority of species out there, not only because they are so simple, but also because they are much more malleable, evolving at an incredible speed that cannot be matched by more complex organisms. Just think of antibiotics resistance: if we were like germs, the following scenario would be perfectly normal.
A guy with blond hair enters a cafe and meets a girl with spiky pink hair. They shake hands, and both leave the cafe as spiky-haired females.