BACKGROUND: Control of HIV transmission could be achievable through an expansion of HIV testing of at-risk populations together with ready access and adherence to antiretroviral therapy. To examine whether increases in testing rates and antiretroviral therapy coverage correspond to the control of HIV transmission, we estimated HIV incidence in men who have sex with men (MSM) in England and Wales since 2001. METHODS: A CD4-staged back-calculation model of HIV incidence was used to disentangle the competing contributions of time-varying rates of diagnosis and HIV incidence to observed HIV diagnoses. Estimated trends in time to diagnosis, incidence, and undiagnosed infection in MSM were interpreted against a backdrop of increased HIV testing rates and antiretroviral-therapy coverage over the period 2001-10. FINDINGS: The observed 3·7 fold expansion in HIV testing in MSM was mirrored by a decline in the estimated mean time-to-diagnosis interval from 4·0 years (95% credible interval [CrI] 3·8-4·2) in 2001 to 3·2 years (2·6-3·8) by the end of 2010. However, neither HIV incidence (2300-2500 annual infections) nor the number of undiagnosed HIV infections (7370, 95% CrI 6990-7800, in 2001, and 7690, 5460-10 580, in 2010) changed throughout the decade, despite an increase in antiretroviral uptake from 69% in 2001 to 80% in 2010. INTERPRETATION: CD4 cell counts at HIV diagnosis are fundamental to the production of robust estimates of incidence based on HIV diagnosis data. Improved frequency and targeting of HIV testing, as well as the introduction of ART at higher CD4 counts than is currently recommended, could begin a decline in HIV transmission among MSM in England and Wales. FUNDING: UK Medical Research Council, UK Health Protection Agency.