Summary The main topic of this paper analyzes bilateral relations between the Republic of Croatia and the Republic of Serbia in the period from 1996 to 2013. This period is divided into three sub-periods. The first starts with the mutual recognition of Croatia and Serbia in 1996, and it ends in 2000 with the death and the downfall of the actors who led these two countries through the war that lasted from 1991 to 1995. In this period amicable relations between Croatia and Serbia were not possible, because in Croatia, as well as in Serbia, leaders were the same ones who were in power during the war, so those leaders did not have the will to establish mutual friendly relationships between the two countries. The second period starts with the year 2000 when there are changes taking place in the governments in both Croatia and Serbia. The opposition won in both countries, in presidential as well as parliamentary elections. That created hope that there is a possibility of establishing amicable relations between Croatia and Serbia. While certain positive changes have occurred, in Croatia and especially in Serbia, positions of power connected with the former regime were still strong, and were one of the reasons why establishing friendly relations was still not possible. Also, memories from the previous war were fresh, and it was still early to talk about amicable relations. The state union of Serbia and Montenegro ended its existence in 2006 and that marks the point in time when Serbia gets its full independence. That event also marks the beginning of the third period which ends when Croatia becomes a member state of the European Union. In that period relations between Croatia and Serbia are oscillating up and down, but they never reach an amicable level, and after 2013, when the period of „frozen peace“ starts, the true friendly level of bilateral relations between Croatia and Serbia has never been reached till this day. Relations between Croatia and Serbia were the key to the stability of Yugoslavia. The conflict between Serbia and Croatia was one of the crucial events which led to the collapse of Yugoslavia. It is similar today when good relations between Croatia and Serbia are the key to stability in the Balkans. Friendly relations are useful per se, but they are also useful for the stability in Bosnia in Herzegovina, and that is because Croatia and Serbia have a significant influence on Croats and Serbs living in BiH. Finally, friendly relations would lead to a more stable region, and with the successful establishment of friendly mutual relations, Croatia and Serbia could become leaders of the whole region of Balkans.