Azerbaijan declared its independence from the former Soviet Union on August 30, 1991, with Ayaz Mutalibov, former First Secretary of the Azerbaijani Communist Party, becoming the country's first President. Following a massacre of Azerbaijanis at Khojali in Nagorno-Karabakh in March 1992, Mutalibov resigned and the country experienced a period of political instability. The old guard returned Mutalibov to power in May 1992, but less than a week later his efforts to suspend scheduled presidential elections and ban all political activity prompted the opposition Popular Front Party (PFP) to organize a resistance movement and take power. Among its reforms, the PFP dissolved the predominantly Communist Supreme Soviet and transferred its functions to the 50-member upper house of the legislature, the National Council.

Elections in June 1992 resulted in the selection of PFP leader Abülfaz Elçibay as the country's second president. The PFP-dominated government, however, proved incapable of either credibly prosecuting the Nagorno-Karabakh conflict or managing the economy, and many PFP officials came to be perceived as corrupt and incompetent. Growing discontent culminated in June 1993 in an armed insurrection in Ganja, Azerbaijan's second-largest city. As the rebels advanced virtually unopposed on Baky, President Elçibəy fled to his native province of Nakhchivan. He died in 2000. The National Council conferred presidential powers upon its new Speaker, Heydar Aliyev, former First Secretary of the Azerbaijani Communist Party (1969-81) and later a member of the U.S.S.R. Politburo, the KGB, and USSR Deputy Prime Minister (until 1987). Elçibəy was formally deposed by a national referendum in August 1993, and Əliyev was elected to a 5-year term as President in October with only token opposition. Əliyev won re-election to another 5-year term in 1998, in an election marred by serious irregularities.

Azerbaijan's first Parliament was elected in 1995. The present 125-member unicameral Parliament was elected in November 2000 in an election that showed little improvements in democratic processes, but still did not meet international standards as free and fair. A majority of parliamentarians are from the President's "New Azerbaijan Party." Opposition parties are represented in Parliament, but are suppressed and are not free to campaign before elections.

Azerbaijan has a strong presidential system in which the legislative and judicial branches have only limited independence.

Əliyev was an absolute ruler. Demonstrations were often suppressed with violence and reports of torture were widespread. Sharp censorship reinforced a pervasive personality cult.

The Speaker of Parliament stood next in line to the President, but the constitution was changed at the end of 2002: now the premier is next in line. This was done to make it possible for the son of the 80-year old Heydar, İlham Aliyev to succeed his father, who was admitted to a Turkish hospital on July 8, 2003 because of heart problems. In August, 2003, İlham was appointed as premier, though Artur Rasizade, who had been prime minister since 1996, continued to fulfill the duties of that office so that İlham could concentrate on his presidential election bid. In the October 2003 presidential elections, İlham was announced winner while international observers reported several irregularities. He was sworn in as president at the end of the month, and Rasizade became premier again.