The incumbent prime minister, Aníbal Cavaco Silva, decided not to run for a fourth consecutive term[1] and the Social Democratic Party, choose Fernando Nogueira, one of Cavaco Silva's deputies, as leader and candidate for prime minister in a highly contested and bitter party congress in February 1995.

[2] But, the PSD was weakened by the end of the 10-year cycle of governments led by Cavaco Silva, amid scandals and the 1994 25 April bridge riots that shocked the country.

The Social Democratic Party suffered a heavy defeat, losing almost 50 seats and 17 percentage points.

The 1991 general election Socialist defeat, and the scale of it, surprised the party, with António Guterres actually saying he "was in shock".

[12] After serving almost 10 years as prime minister, there were doubts if Cavaco Silva would run for another term, thus, creating a big "taboo" in Portuguese politics.

[13] Cavaco promised a decision during the spring of 1995, but in January 1995, he announced he would not run for another term as prime minister and PSD leader.

[16] Santana Lopes withdrew before the ballot, and Fernando Nogueira narrowly defeated Durão Barroso by just 33 votes.