Violent protests in 2004 and 2005 led to a series of reforms by President Gayoom to legalize political parties and improve the democratic process. Multi-party, multi-candidate elections were held on 9 October 2008, with 5 candidates running against incumbent Gayoom. A 28 October runoff election between Gayoom and Mohamed Nasheed as the Presidential Candidate, a former journalist and political prisoner who is a staunch critic of the Gayoom regime, resulted in a 54-percent majority for Nasheed and his vice-president candidate Dr. Waheed. In a speech prior to handing over power to his successor on 11 November 2008, Gayoom said: "I deeply regret any actions on my part ... (that) led to unfair treatment, difficulty or injustice for any Maldivian." At the time, Gayoom was the longest serving leader of any Asian nation.

Mohamed Nasheed became the first President to be elected by a multi-party democracy in the Maldives, and Dr. Waheed was the first elected Vice President in the Maldives. Their election victory ended the 30 year rule of President Gayoom.

The new government of President Nasheed faces restoring the islands and economy after the 2004 tsunami, addressing concerns for the effect of global warming on the future of the islands, unemployment, government corruption, and increasing drug use, especially among youth. On 10 November 2008, Nasheed announced an intent to create a sovereign wealth fund with money earned from tourism that could be used to purchase land elsewhere for the Maldives people to relocate should rising sea levels due to climate change inundate the country. The government is reportedly considering locations in Sri Lanka and India due to cultural and climate similarities, and as far away as Australia. Climate Change so far has had no effect on the sea level of land mass of the Maldives.