Raman K said..
Server.Transfer transfers page processing from one page directly to the next page without making a round-trip back to the client's browser. This provides a faster response with a little less overhead on the server. Server.Transfer does not update the clients url history list or current url.
Response.Redirect is used to redirect the user's browser to another page or site. This performas a trip back to the client where the client's browser is redirected to the new page. The user's browser history list is updated to reflect the new address.