"Transitioning" vs. "transitional" phase

I am wondering if it is correct to say:

This is a transitioning phase.

Personally, I would say

This is a transitional phase.

but my friend insists that the above is just as correct as my version.

Any insight would be greatly appreciated!

They are both correct; however, the first is somewhat ambiguous (in that it could mean the phase is transitioning). Hence it is much less common:

http://ngrams.googlelabs.com/chart?content=transitional+phase%2Ctransitioning+phase&year_start=1800&year_end=2000&corpus=0&smoothing=3

Since ambiguity should be guarded against whenever possible, my advice to you is: go on saying "transitional phase"!

Grammatically, there's no problem -- any participle can be legally used as an adjective.

Is it as effective, insofar as language use? I'd say not, because it's ambiguous -- what is "transitioning": items/processes inside the phase, or is the phase itself moving to something else (as in a workflow)?

If there's no chance it will be misunderstood, given its context, then fair enough -- but it never hurts to take no chances, so tell him it's safer to use "transitional".