Large-scale systemic state capture, which is the root of widespread corruption, is acquiring such proportions in Serbia that it may undermine the success of its transition. ‘State capture’ is defined as any group or social strata, external to the state, that seizes decisive influence over state institutions and policies for its own interests and against the public good. The appropriation of state institutions and functions by the political party leadership is being carried out at an alarming rate in Serbia, as supported by research data in this paper by Vesna Pesic, an International Policy Research Fellow. The phenomenon of state capture is explored in depth looking at its background, prevalence and variety of mechanisms in Serbia today. The author concludes with policy options and recommendations to help curb corruption, address the deep mistrust expressed by the Serbian people about their political system, and to pave the way for democratic transition.