The by-election was triggered by the retirement of the sitting member, the Australian Labor Party's John Dawkins, on 4 February 1994.

John Dawkins had held Fremantle for the Labor Party since 1977, and he had been a minister in the Hawke and Keating governments, and had been Treasurer since December 1991.

When the Cabinet rebelled against the budget he brought down in August 1993, Dawkins resigned from the Treasury and, after giving occasional signals of his rising disillusionment with political life, resigned from Parliament altogether.

The campaign took place in the context of tensions within the Liberal party over the leadership of Dr John Hewson, and parliamentary conflict over the sports rorts affair which had engulfed a Labor minister Ros Kelly, and a tussle between the Senate and the Labor government over documents relating to media ownership changes.

[2] Lawrence resigned from her state seat of Glendalough in order to contest Fremantle.