The paper analyses transformation process in Hungary between 1989 and 2004. The goal of this paper is to analyze and evaluate the transformation process in Hungary. The structure of the paper follows this general goal. First of all, an analysis of economic development of the country before the fall of the communist regime is carried out because this determined the whole process which followed. Then we shortly mention political development that had a significant impact on the transformation process and its results. In the next part we concentrate on the main steps in the economic transformation, and consequently we devote space to specific aspects - privatization, for example. The main economic indicators of this period are analyzed in the final part. We conclude that the transformation process achieved its main economic goal and the economy’s ability to grow increased. At the same time, however, the transformation process created environment for the subsequent economic problems.