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Abstract The quality of political competition at the moment of transition explains the divergence in the domestic trajectories of East European states, steering Poland, Hungary, and the Czech Republic towards liberal democracy, and Romania, Bulgaria and Slovakia towards illiberal democracy after 1989. From 1989 to 1994, the European Union (EU) exerted only passive leverage on its democratizing neighbours, reinforcing liberal strategies of reform but failing to avert illiberal ones. After 1995, the EU exerted active leverage on the domestic politics of credible future members through the enlargement process. The benefits and requirements of EU membership, combined with the structure of the EU’s pre-accession process, interacted with domestic factors to improve the quality of political competition and to accelerate political and economic reforms in candidate states. The enlargement of the EU has thus promoted a convergence towards liberal democracy across the region. I unpack the consequences of the pre-accession process for the quality of democracy in the new members, the dynamics of the negotiations between the old members and the candidates, and the impact of the 2004 enlargement on the future of European integration. I conclude by exploring the usefulness of the EU’s active leverage in promoting liberal democracy in other prospective members such as Turkey and the states of the Western Balkans, and the trade-offs of further enlargements for the EU itself. The most successful tool of EU foreign policy has turned out to be EU enlargement—and this book helps us understand why and how it works.