diff --git a/doc/source/whatsnew/v1.2.0.rst b/doc/source/whatsnew/v1.2.0.rst
index 09cb024cbd95c..1aa88e56689c2 100644
--- a/doc/source/whatsnew/v1.2.0.rst
+++ b/doc/source/whatsnew/v1.2.0.rst
@@ -552,7 +552,7 @@ Groupby/resample/rolling
 - Bug in :meth:`Rolling.median` and :meth:`Rolling.quantile` returned wrong values for :class:`BaseIndexer` subclasses with non-monotonic starting or ending points for windows (:issue:`37153`)
 - Bug in :meth:`DataFrame.groupby` dropped ``nan`` groups from result with ``dropna=False`` when grouping over a single column (:issue:`35646`, :issue:`35542`)
 - Bug in :meth:`DataFrameGroupBy.head`, :meth:`DataFrameGroupBy.tail`, :meth:`SeriesGroupBy.head`, and :meth:`SeriesGroupBy.tail` would raise when used with ``axis=1`` (:issue:`9772`)
-
+- Bug in :meth:`DataFrameGroupBy.transform` would raise when used with ``axis=1`` and a transformation kernel (e.g. "shift") (:issue:`36308`)
 
 Reshaping
 ^^^^^^^^^
diff --git a/pandas/core/groupby/generic.py b/pandas/core/groupby/generic.py
index 6f86819303537..3395b9d36fd0c 100644
--- a/pandas/core/groupby/generic.py
+++ b/pandas/core/groupby/generic.py
@@ -1675,11 +1675,16 @@ def _wrap_transformed_output(
         DataFrame
         """
         indexed_output = {key.position: val for key, val in output.items()}
-        columns = Index(key.label for key in output)
-        columns.name = self.obj.columns.name
-
         result = self.obj._constructor(indexed_output)
-        result.columns = columns
+
+        if self.axis == 1:
+            result = result.T
+            result.columns = self.obj.columns
+        else:
+            columns = Index(key.label for key in output)
+            columns.name = self.obj.columns.name
+            result.columns = columns
+
         result.index = self.obj.index
 
         return result
diff --git a/pandas/core/groupby/groupby.py b/pandas/core/groupby/groupby.py
index e3fceb9bf0a06..ec96a0d502d3f 100644
--- a/pandas/core/groupby/groupby.py
+++ b/pandas/core/groupby/groupby.py
@@ -2365,7 +2365,7 @@ def cumcount(self, ascending: bool = True):
         dtype: int64
         """
         with group_selection_context(self):
-            index = self._selected_obj.index
+            index = self._selected_obj._get_axis(self.axis)
             cumcounts = self._cumcount_array(ascending=ascending)
             return self._obj_1d_constructor(cumcounts, index)
 
@@ -2706,8 +2706,8 @@ def pct_change(self, periods=1, fill_method="pad", limit=None, freq=None, axis=0
             fill_method = "pad"
             limit = 0
         filled = getattr(self, fill_method)(limit=limit)
-        fill_grp = filled.groupby(self.grouper.codes)
-        shifted = fill_grp.shift(periods=periods, freq=freq)
+        fill_grp = filled.groupby(self.grouper.codes, axis=self.axis)
+        shifted = fill_grp.shift(periods=periods, freq=freq, axis=self.axis)
         return (filled / shifted) - 1
 
     @Substitution(name="groupby")
diff --git a/pandas/tests/frame/apply/test_frame_transform.py b/pandas/tests/frame/apply/test_frame_transform.py
index d141fa8682c10..f2a66b553b366 100644
--- a/pandas/tests/frame/apply/test_frame_transform.py
+++ b/pandas/tests/frame/apply/test_frame_transform.py
@@ -27,8 +27,6 @@ def test_transform_groupby_kernel(axis, float_frame, op):
         pytest.xfail("DataFrame.cumcount does not exist")
     if op == "tshift":
         pytest.xfail("Only works on time index and is deprecated")
-    if axis == 1 or axis == "columns":
-        pytest.xfail("GH 36308: groupby.transform with axis=1 is broken")
 
     args = [0.0] if op == "fillna" else []
     if axis == 0 or axis == "index":
diff --git a/pandas/tests/groupby/transform/test_transform.py b/pandas/tests/groupby/transform/test_transform.py
index d7426a5e3b42e..b4e023f569844 100644
--- a/pandas/tests/groupby/transform/test_transform.py
+++ b/pandas/tests/groupby/transform/test_transform.py
@@ -158,7 +158,25 @@ def test_transform_broadcast(tsframe, ts):
             assert_fp_equal(res.xs(idx), agged[idx])
 
 
-def test_transform_axis(tsframe):
+def test_transform_axis_1(transformation_func):
+    # GH 36308
+    if transformation_func == "tshift":
+        pytest.xfail("tshift is deprecated")
+    args = ("ffill",) if transformation_func == "fillna" else tuple()
+
+    df = DataFrame({"a": [1, 2], "b": [3, 4], "c": [5, 6]}, index=["x", "y"])
+    result = df.groupby([0, 0, 1], axis=1).transform(transformation_func, *args)
+    expected = df.T.groupby([0, 0, 1]).transform(transformation_func, *args).T
+
+    if transformation_func == "diff":
+        # Result contains nans, so transpose coerces to float
+        expected["b"] = expected["b"].astype("int64")
+
+    # cumcount returns Series; the rest are DataFrame
+    tm.assert_equal(result, expected)
+
+
+def test_transform_axis_ts(tsframe):
 
     # make sure that we are setting the axes
     # correctly when on axis=0 or 1