<jats:title>Abstract</jats:title> <jats:p>We present a new volume-limited sample of L0–T8 dwarfs out to 25 pc defined entirely by parallaxes, using our recent measurements from UKIRT/WFCAM along with Gaia DR2 and literature parallaxes. With 369 members, our sample is the largest parallax-defined volume-limited sample of L and T dwarfs to date, yielding the most precise space densities for such objects. We find the local L0–T8 dwarf population includes <jats:inline-formula> <jats:tex-math> <?CDATA $5.5 \% \pm 1.2 \% $?> </jats:tex-math> <jats:inline-graphic xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="ajabc893ieqn1.gif" xlink:type="simple" /> </jats:inline-formula> young objects (≲200 Myr) and <jats:inline-formula> <jats:tex-math> <?CDATA $2.6 \% \pm 1.6 \% $?> </jats:tex-math> <jats:inline-graphic xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="ajabc893ieqn2.gif" xlink:type="simple" /> </jats:inline-formula> subdwarfs, as expected from recent studies favoring representative ages ≲4 Gyr for the ultracool field population. This is also the first volume-limited sample to comprehensively map the transition from L to T dwarfs (spectral types ≈L8–T4). After removing binaries, we identify a previously unrecognized, statistically significant (>4.4<jats:italic>σ</jats:italic>) gap ≈0.5 mag wide in <jats:inline-formula> <jats:tex-math> <?CDATA ${(J-K)}_{\mathrm{MKO}}$?> </jats:tex-math> <jats:inline-graphic xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="ajabc893ieqn3.gif" xlink:type="simple" /> </jats:inline-formula> colors in the L/T transition, i.e., a lack of such objects in our volume-limited sample, implying a rapid phase of atmospheric evolution. In contrast, the most successful models of the L/T transition to date—the “hybrid” models of Saumon & Marley—predict a pileup of objects at the same colors where we find a deficit, demonstrating the challenge of modeling the atmospheres of cooling brown dwarfs. Our sample illustrates the insights to come from even larger parallax-selected samples from the upcoming Legacy Survey of Space and Time by the Vera Rubin Obsevatory.</jats:p>