In 1999 legislative and presidential elections were held and Olusegun Obasanjo was elected president. The military administration handed over power to Nigeria's new civilian government in May, and the country adopted a new constitution. The Commonwealth of Nations lifted its suspension of Nigeria's membership to coincide with the resumption of civilian rule.

Obasanjo's early years in office were plagued by sporadic outbursts of communal violence across the country. Clashes between religious and ethnic groups, often spawned by local political disputes, have killed thousands of Nigerians since 1999. Obasanjo succeeded in opening up the economy to foreign investors. This resulted in huge volume of investment in the country. Mega companies were setup in oil and gas, banking, insurance and telecoms. President Obasanjo also cleared up Nigeria's huge external debt burden and significantly increase the country's foreign reserves. However as in previous administrations, incidents of corruption continued to plague his government. In April 2003 Obasanjo was reelected to another term, winning the election by a wide margin. International observers criticized the election for widespread incidents of electoral fraud in some states.
In 2006 Obasanjo and his supporters attempted to amend Nigeria's constitution so that Obasanjo could prolong his term in office. However, the effort failed. In the presidential elections in April 2007 Obasanjo's hand-picked successor, Umaru Yar'Adua, won in a landslide with about 70 percent of the vote. Opposition parties charged fraud, and international election observers described the vote process as "flawed". Yar'Adua took office on May 29, 2007. 

On 23 November 2009, President Umaru Yar'Adua left Nigeria to Saudi Arabia for medical treatment. He did not provide for anyone to assume his duties. This brought about heated debate and instability in the country with some speculating that the Military may return. On 13 January 2010, a federal court handed Vice-President Dr. Goodluck Jonathan the power to carry out state affairs in the president's continued absence. On 22 January 2010, the Supreme Court of Nigeria ruled that the Federal Executive Council had 14 days to decide on a resolution about whether President Yar'Adua "is incapable of discharging the functions of his office".
On 9 February 2010, the Senate in a landmark decision determined that presidential power should be transmitted to the Vice President. He was to serve as Acting President, with all the accompanied powers, until Yar'Adua returns to full health. On 24 February 2010, Yar'Adua returned to Nigeria from Saudi Arabia. This initially sparked a lot of confusion as to who should be in charge. However, Jonathan Goodluck remained Acting President while Yar'Adua continued to recover. Unfortunately, President Yar'Adua died on May 5th, 2010. Goodluck Jonathan was sworn into the office of President of the Federal Republic of Nigeria on May 6th 2010. President Jonathan picked the Governor of Kaduna State, Namadi Sambo as Vice President. To prevent such a destabilizing situation from occurring in future, amendments have since been made to the Constitution. Elections will again be held in 2011 when the Jonathan / Sambo term expires.