The long-term dynamical evolution of a Keplerian binary orbit due to the em
ission and absorption of gravitational radiation is investigated. This work
extends our previous results on transient chaos in the planar case to the
three-dimensional Kepler system. Specifically, we consider the nonlinear ev
olution of the relative orbit due to gravitational radiation damping as wel
l as external gravitational radiation that is obliquely incident on the ini
tial orbital plane. The variation of orbital inclination, especially during
resonance capture, turns out to be very sensitive to the initial condition
s. Moreover, we discuss the novel phenomenon of chaotic transition.