Transition of economies in former socialist countries started in the last decade of the last century, and in diferent economies there were a variety of intensity and quality. In some of these countries the transition process have been completed, while in others, including Serbia – is still in progress. In the economic theory, transition is explained as a consequence of the necessity of the socialist model collapse and transformation of centralized-planned to a market economy. Transition of Serbian economy has started with some delay at the beginning of this century, after the turbulent years of the dissolution of former Yugoslavia, sanctions, hyperinflation and a large decline of the majority of companies. The main characteristics of the transition of the Serbian economy are manifested through the process of privatization of social enterprises by methods of tender and auction sales of social capital and by method of the restructuring of large business systems, as well as the formation and development of the category of small and medium enterprises (SMEs). Transition of the Serbian economy is a long and painful process, but necessary step towards strengthening the competitive position of enterprises and reintegration of the Serbian economy in the international division of labor.