The Polish Round Table Agreement of April 1989 called for local self-government, policies of job guarantees, legalization of independent trade unions and many wide-ranging reforms. Only 35% of the seats in the Sejm (national legislature's lower house) and all of the Senate seats were freely contested; the remaining Sejm seats (65%) were guaranteed for the communists and their allies.

On 19 August, President Jaruzelski asked journalist and Solidarity activist Tadeusz Mazowiecki to form a government; on 12 September, the Sejm voted approval of Prime Minister Mazowiecki and his cabinet. Mazowiecki decided to leave the economic reform entirely in the hands of economic liberals led by the new Deputy Prime Minister Leszek Balcerowicz, who proceeded with the design and implementation of his "shock therapy" policy. For the first time in post-war history, Poland had a government led by non-communists, setting a precedent soon to be followed by other Eastern Bloc nations in a phenomenon known as the Revolutions of 1989. Mazowiecki's acceptance of the "thick line" formula meant that there would be no "witch-hunt", i.e., an absence of revenge seeking or exclusion from politics in regard to former communist officials.

In part because of the attempted indexation of wages, inflation reached 900% by the end of 1989, but was soon dealt with by means of radical methods. In December 1989, the Sejm approved the Balcerowicz Plan to transform the Polish economy rapidly from a centrally planned one to a free market economy. The Constitution of the Polish People's Republic was amended to eliminate references to the "leading role" of the communist party and the country was renamed the "Republic of Poland". The communist Polish United Workers' Party dissolved itself in January 1990. In its place, a new party, Social Democracy of the Republic of Poland, was created. "Territorial self-government", abolished in 1950, was legislated back in March 1990, to be led by locally elected officials; its fundamental unit was the administratively independent gmina.

In November 1990, Lech Wałęsa was elected president for a five-year term; in December, he became the first popularly elected president of Poland. Poland's first free parliamentary election was held in October 1991. 18 parties entered the new Sejm, but the largest representation received only 12% of the total vote.

In 1993, the formerly Soviet Northern Group of Forces, a vestige of past domination, left Poland. Poland joined NATO in 1999. Elements of the Polish Armed Forces have since participated in the Iraq War and the Afghanistan War. Poland joined the European Union as part of its enlargement in 2004. However, Poland has not adopted the euro as its currency and legal tender, but instead uses the Polish złoty.

In October 2019, Poland's governing Law and Justice party (PiS) won parliamentary election, keeping its majority in the lower house. The second was centrist Civic Coalition (KO). The government of Prime Minister Mateusz Morawiecki continued. However, PiS leader Jarosław Kaczyński was considered the most powerful political figure in Poland although not a member of government. In July 2020, President Andrzej Duda, supported by PiS, was re-elected.