By August 1992, the Bosnian Serbs had conquered over 60 percent of Bosnia. The war began to diminish only after NATO forces entered the country and bombed Serb positions. Despite this, in 1993, fighting between Bosnians and Croats intensified. Serbs entered the UN safe camps of Tuzla, Zepa and Srebrenica and murdered thousands of people. Some 250,000 people were killed between 1992 and 1995.

The 1995 Dayton Peace Accord, sponsored by the United Nations (UN), was signed in the U.S. city of Dayton, Ohio, which led to the creation of a Muslim-Croat federation and a Serb entity within the larger federation of Bosnia. NATO sent 60,000 troops to supervise the implementation of the agreement. Fighting stopped and elections were held in September 1996. Alija Izetbegovic, a Bosnian Muslim, won a majority of the votes and became the leader of a three member presidency, each representing one of the three ethnic groups. However, this alliance had little success and could not stop the violent clashes which already existed. The terms of the Dayton Accord were mostly ignored by the Bosnian Serbs, led by the former president Radovan Karadjic, an arch-nationalist and war criminal with great influence in the Serbian enclave. NATO was seen as an ineffective peacekeeping force.

The most significant priorities of post-war Bosnia included the rebuilding of its economy, the resettlement of one million refugees and a working government. However, the lack of these reforms aided the growing massive corruption in the country, which exploded in 1999.