Transforming a card turns it into a random different card which can be of a different rarity (Common, Uncommon, or Rare) and type (Attack, Skill, or Power).
A colored card for your class will only transform into another colored card for your class. (I think.) (What happens if you have Prismatic Shard?)
Colorless cards will only transform into other colorless cards. (I think.)
Curses will only transform into other curses.
Upgraded cards will lose their upgrade when transformed.