Before you add a transition between clips, such as a dissolve to make your first clip gradually dissolve into the second, you need to make sure you have enough extra material or "handles" on your clips so Final Cut Pro has excess video to work with when it applies the transition.

For example, let's say you selected two clips in the Browser and then, without editing them (such as creating In or Out points), dragged them to the Timeline and put them next to each other on the same track.

If you then tried to apply a transition between the two clips, Final Cut Pro would reject it. That's because there's no extra video to use for the transition, in which a portion of one clip overlaps with part of the other clip.

The only way Final Cut Pro could apply the transition to these two unedited clips would be to try to somehow move them on the Timeline so they overlapped. But that would shorten the movie and disrupt the timing of audio on any adjacent track.

There's just no room for a transition to be applied to unedited clips.

This means you need to make sure before you add a transition that the first clip has enough extra, unused material at its end, and the second clip has enough extra, unused material at its beginning so Final Cut Pro can apply the transition.

Thus if you want a one-second transition between two clips, you should have half a second or more of unused material at the end of the first clip, and another half second or more of unused material at the beginning of the second clip.

Adding the Handles for Transitions

If you know you want to apply a transition between two clips, you should add In and Out points to the clips in the Viewer before dragging the clips to the Timeline. Use the In and Out points to create enough extra, unused video for the duration of the transition you want to apply.

If your clips are already in Timeline and Final Cut Pro is rejecting a transition between them, you'll need to double click on the first clip in the Timeline to display it in the Viewer. Then check to see if there's an Out point near the end of the clip and enough excess material after the Out point to accommodate half the transition. If not, then you'll need to drag the Out point to the left until the unused portion of the clip is long enough to accommodate half of the transition you're going to apply.

Repeat this procedure with the second clip in the Timeline. Double click on it to display it in the Viewer. Then check to see if there's an In point near the beginning of the clip and enough excess material before the In point to accommodate half the transition. If not, then you'll need to drag the In point to the right until the unused portion of the clip is long enough to accommodate half of the transition you're going to apply.

After you've edited the clips, you'll need to drag the now shortened clips back next to each other in the Timeline (editing the clips with the In and Out points in the Viewer, shortens them and creates a gap between the two clips in the Timeline).

Now you'll be able to apply your transition to the clips, because you've marked out enough excess video in your clips to be used in the transition.

Note: if you're editing clips that are in the Timeline, be sure to have linking and snapping turned on, so any audio associated with the clips remains in synch with the video and so the clips will snap together when you move them.