The 21st century has brought important changes in the paradigms of economic development, one of them being a shift toward recognizing knowledge and information as the most valuable commodities of today. The European Union (EU) has been working hard to become the most competitive knowledge-based society in the world, and Croatia, an EU candidate country, has been faced with a similar task. To establish itself as one of the best knowledge-based country in the Eastern European region over the next 4 years, Croatia realized it has to create an education and science system correspondent with European standards and sensitive to labor market needs. For that purpose, the Croatian Ministry of Science, Education, and Sports (MSES) has created and started implementing a complex strategy, consisting of the following key components: the reform of education system in accordance with the Bologna Declaration; stimulation of scientific production by supporting national and international research projects; reversing the "brain drain" into "brain gain" and strengthening the links between science and technology; and informatization of the whole education and science system. In this comprehensive report, we describe the implementation of these measures, whose coordination with the EU goals presents a challenge, as well as an opportunity for Croatia to become a knowledge-based society by 2010.