Summary: We show that string theory in \(\text{AdS}_3\) has two distinct phases depending on the radius of curvature \(R_{\text{AdS}}=\sqrt{k}l_s\). For \(k>1\) (i.e., \(R_{\text{AdS}}>l_s\)), the \(\text{SL}(2,\mathbb C)\) invariant vacuum of the spacetime conformal field theory is normalizable, the high energy density of states is given by the Cardy formula with \(c_{\text{eff}}=c\), and generic high energy states look like large BTZ black holes. For \(k<1\), the \(\text{SL}(2,\mathbb C)\) invariant vacuum as well as BTZ black holes are non-normalizable, \(c_{\text{eff}}<c\), and high energy states correspond to long strings that extend to the boundary of \(\text{AdS}_3\) and become more and more weakly coupled there. A similar picture is found in asymptotically linear dilaton spacetime with dilaton gradient \(Q=\sqrt{2/k}\). The entropy grows linearly with the energy in this case (for \(k>1/2\)). The states responsible for this growth are two-dimensional black holes for \(k>1\), and highly excited perturbative strings living in the linear dilaton throat for \(k<1\). The change of behavior at \(k=1\) in the two cases is an example of a string/black hole transition. The entropies of black holes and strings coincide at \(k=1\).