Purposes: The purposes of this study were to investigate the incidence of lymphedema in patients with breast cancer during and after adjuvant treatment with docetaxel, doxorubicin, and cyclophosphamide (TAC), to identify predictors for development of lymphedema, and to describe consequences in daily life in relation to lymphedema. Methods: This is a prospective study with measurements before chemotherapy (T0), during chemotherapy before cycle 2 (T1), cycle 4 (T2), and 1 month after completion of treatment (T3). Volume change was monitored using tape measurements. Lymphedema was defined as ≥ 10% volume difference. Linear mixed-effect models were estimated to analyze differences in arm volume and consequences in daily life (total score and domain scores of the Lymph-International Classification of Functioning (ICF) questionnaire) over time and to identify treatment and patient characteristics as predictors for changes in volume. Results: Forty-eight patients completed all measurements. Volume did not change during TAC treatment. One month after treatment, volume was significantly increased compared to T0-T2, and 12 patients (25%) had developed lymphedema. Axillary lymph node dissection was associated with lymphedema (ES 2.9, 95% CI 0.02–5.7; p < 0.05). In patients with and without lymphedema, 1 month after completion (T3), the Lymph-ICF questionnaire showed significant limitations in physical function compared to T0-T2. In patients with lymphedema at T3, a significant association between volume and total score on the Lymph-ICF questionnaire on physical function and mobility activities was observed. Conclusions: One month after treatment in 12 patients (25%), volume difference increased over 10%. Axillary lymph node dissection was predictive for development of lymphedema. All patients, but more patients with lymphedema, perceived difficulties in activities in daily life after treatment.