This work deals with the kinetics of polymerization processes with chain transfer to monomer and reversible formation of dormant species. Such a mechanism is typical for cationic polymerization in the presence of Lewis acids as co-initiators. The expressions of number- and weight-average degrees of polymerization and polydispersity index are derived rigorously for a mechanism with free ions as the active species, but it is also applied to other mechanisms, e.g., ion pairs as active species. Plots of polydispersity index versus monomer conversion can be easily computed on a PC computer even though the expressions for the weight-average degree of polymerization and the concentration of residual initiator consist of confluent hypergeometric functions. Numerical calculations show that the polydispersity index of the resulting polymer approaches M(w)/M(n) = 2 with increasing rate constant of chain transfer. Addition of common ions led to narrower molecular weight distributions. For the polymerization of indene with the cumyl chloride/titanium tetrachloride initiating system in methylene chloride, the calculated results of number-average degree of polymerization are in agreement with the experimental data reported in the literature.