The essay analyses the process of privatization in the transitional period. In the early 1990's, the privatization of the competitive sphere in Hungary meant the purchase of state-owned companies. Besides the legal background, the essay gives an overview on the political aspects of privatization. The next step was the privatization of public services in the middle of the 90's. The privatization of the sector of public services is peculiar as privatised public services remain under governmental control even after their privatization: public administration is responsible for the continuity of the service, for its general accessibility and its quality. The essay deals with the issues of the application of law in this respect. The privatization of the welfare sphere was primarily characterised by the retreat of the state without applying alternative methods like initiating the participation of non-profit organizations. In the analyses of the privatization of the welfare sphere, the essay deals with the principles of privatization, as well as the constitutional problems involved and the conflicts of the central government and the self-governments.