Thaksin entered politics in the early 1990s. He served as Minister of Foreign Affairs for a few months in 1994-95 and then was appointed leader of the Palang Dharma Party in 1995. He served as Deputy Prime Minister in charge of traffic and transportation in Bangkok during 1995-96, resuming the same post again in 1997. After the constitutional changes in 1997, Thaksin formed a new political party called Thai Rak Thai (Thais Love Thais) and was elected to Parliament in 1998. The 2001 elections were the first to be held under the guidelines of the new Constitution, one of which restricted the much criticized Thai practice of elected officials haphazardly changing parties. The Constitution outlawed individual members of Parliament from switching parties, though it did allow entire political parties to switch allegiances. Thaksin spent lavishly from his own fortune on his campaign (published reports indicate that of the 330 million baht spent, 300 million was from his personal fortune) and recruited members of other political factions to join Thai Rak Thai, hoping to win a majority in Parliament, something no single political party had been able to do in a democratic election in Thailand. Thaksin's victory in the 2001 elections won his Thai Rak Thai party 248 seats, the largest parliamentary plurality an elected Thai government has ever enjoyed. All 14 members of a small party later joined Thai Rak Thai, giving the party an absolute majority: a first in modern Thai history.
During his campaign, Thaksin was indicted by the National Counter Corruption Commission for allegedly hiding personal assets in excess of US $100 million. (The indictment came less than a month before the elections, and Thailand's constitutional court agreed to hear the case after the elections. In September 2001, by a vote of 8-6, Thaksin was cleared of the allegations.)