Patients with atrial fibrillation (AF) and ischemic stroke are at high risk for stroke recurrence. Early anticoagulation may reduce the risk of recurrent events but is usually avoided due to the risk of hemorrhagic transformation (HT). Current guidelines are based on empiric expert opinion. The assumed risk of HT is based on historical data from an older generation of anticoagulants. The direct oral anticoagulants (DOACs) have demonstrated lower risk of intracranial hemorrhage compared to older anticoagulants. However, the optimal timing of DOAC initiation after AF-related ischemic stroke has remained an area of clinical equipoise, as the pivotal phase III trials did not include patients in the early period after ischemic stroke. Multiple prospective studies and a few smaller randomized controlled trials evaluating the safety and efficacy of early versus delayed DOAC initiation have been completed. These studies have reported promising results of early DOAC initiation after acute ischemic stroke. However, a standardized documentation of HT rates on follow-up imaging with objective assessment criteria is missing from most of these studies. Larger randomized trials of early versus delayed DOAC are ongoing. A literature review was performed using keywords and Medical Subject Headings in MEDLINE/PubMed and Google Scholar databases. For each relevant paper, the bibliography was scrutinized for other relevant articles and journals. In this article, we review the risk of recurrent ischemic stroke and HT in patients with AF, pathophysiology, classification, predictors, natural history, and outcomes of HT and discuss the studies of early anticoagulation after AF-related ischemic stroke.