On 4 November 2001 he defeated Daniel Ortega of the Sandinista National Liberation Front party in the presidential election and was sworn in as president on 10 January 2002.

At the beginning of his term as president, he led an anti-corruption campaign that ultimately convicted his predecessor and head of the PLC, Arnoldo Alemán to 20 years in prison.

[4] He received his primary and secondary education in Nicaragua at the Jesuit Colegio Centro América,[5] and graduated from Saint Louis University in the United States with a degree in industrial engineering.

In August this resulted in the prosecution, and ultimately the conviction of his predecessor Alemán with fraud, money laundering, and misuse of public funds,[4] in sums totaling almost $100 million.

[4] Throughout his administration, Bolaños faced obstacles from power based outside the Presidency, later citing what he characterized as three coup attempts against his government: the first, early in his tenure came when the Supreme Court of Justice of Nicaragua sent an accusation to the National Assembly that he had used funds from the "huaca" to finance his electoral campaign and asked to reverse it.

[17] Finally, in September 2005, Bolaños publicly denounced as a “slow motion coup” the joint efforts of Ortega, Alemán, the PLC, and the FSLN, together with the National Assembly, which attempted constitutional reforms to strip him of power.

[17] The executive branch was partially stripped of its powers to appoint ministers and public officials, but, facing pressure from the international community, particularly the OAS, the EU, and the United States, constitutional changes were postponed until the following year.

[18] Despite this crisis, he succeeded in negotiating the ratification of the Central American Free Trade Agreement (CAFTA) by the National Assembly; as well as the forgiveness of 80% of Nicaragua’s debts by creditors.

[2] Focused on macroeconomics, he set up investment incentives that spurred sustained economic growth at levels the country had not seen in decades; but this emphasis came at the expense of policies to help the poor, something his adversary Ortega seized on to fuel opposition.

[22] As outgoing President, he was legally entitled to a seat in the new session of the National Assembly, a practice he had criticized after its creation in the 1990s as part of the “pact” between Alemán and Ortega.