Resentment against Suharto's regime grew throughout the 1990s, but he would probably have survived for a few more years if it hadn't been for the currency crisis that hit the region in the latter part of 1997, a crisis triggered by a run on the Thai baht. In a few dramatic months, the Rupiah slipped in value from Rp2500 to the US dollar to nearly Rp9000. Prices of even the most basic of goods such as fuel and food rose five hundred percent.

The IMF promised to help Indonesia out of the crisis only after certain conditions had been met, including the removal of Suharto's family and friends from a number of senior and lucrative posts. Foreign investors lost all confidence in Suharto, and the rupiah went into freefall.

Pressure on Suharto was also growing from his own people, as many took to the streets to protest against his incompetence and demand greater political freedom. These demonstrations , initially fairly peaceful, grew more violent as the people's frustration increased, until a state of lawlessness ensued. For over a week, riots took place in all the main cities, buildings were set on fire and shops looted. The Chinese community , long resented in Indonesia for their domination of the economy and success in business, were targeted by the rioters for special persecution. Over 1200 people died in the mayhem that followed the May elections, until, on May 21, 1998, Suharto stepped down and his vice-president, BJ Habibie, took over.