The ruling Croatian Democratic Union entered the elections weakened by a series of corruption scandals that came to light in the previous parliamentary term and fractures between its hardline nationalists and more moderate members.

On 25 May, the governing HDZ and the six mainstream opposition parties signed an agreement to develop a consensus-based legislative framework for the upcoming parliamentary elections.

[2] As before all previous elections since the breakup of Yugoslavia, the electoral laws were altered in an attempt to improve the chances for the ruling party; this included a new voting system and redistricting.

There was speculation about elections being held during the Christmas holidays in order to have as many Croatian expatriates (traditionally HDZ supporters) in the country, but the date of 3 January was chosen as the most suitable.

Following the elections, Social Democratic Party leader Ivica Račan was appointed prime minister on 27 January 2000, by a decree of Acting President and Speaker of the outgoing assembly of Parliament, Vlatko Pavletić.