The incumbent Liberal Party of Australia led by Premier of South Australia John Olsen defeated the Australian Labor Party led by Leader of the Opposition Mike Rann, forming a minority government with the SA Nationals and independent MPs.

Premier Dean Brown had been toppled by Industry Minister and factional rival John Olsen in a 1996 party-room coup.

Indeed, on election night many Liberal observers feared that Labor had managed the swing it needed to regain government.

Olsen was forced to seek the support of the Nationals and the independents to stay in office at the helm of a minority government.

Labor Upper House members Terry Cameron and Trevor Crothers would resign from the party in 1998 and 1999 respectively, to support the Liberals over the privatisation of ETSA.

On 6 February 2007, Mike Rann told parliament that some in the Liberal party had leaked information to him before and during the election campaign.