General elections were held in Brazil on 6 October 2002, with a second round of the presidential election on 27 October. The elections were held in the midst of an economic crisis that began in the second term of the incumbent president, Fernando Henrique Cardoso of the centre-right Brazilian Social Democracy Party (PSDB). Due to constitutional term limits, Cardoso was ineligible to run for a third consecutive term.

Luiz Inácio Lula da Silva of the Workers' Party (PT), a former labor leader and federal deputy for São Paulo, ran for president for a fourth time. Lula had previously lost in the 1989, 1994, and 1998 presidential elections, being defeated by Cardoso in the latter two. Lula somewhat moderated his political approach in the 2002 presidential campaign, writing a document now known as the Letter to the Brazilian People to ease fears that he would transition Brazil into a full-fledged socialist economy. Staying true to this turn to the center, Lula chose José Alencar, a millionaire textile businessman and Senator from Minas Gerais associated with the centre-right Liberal Party (PL), as his running mate.

Following a tense intra-party battle over who would run to succeed Cardoso on the PSDB ticket, former Minister of Health José Serra was ultimately selected by the party to be its standard bearer for President in 2002. Rita Camata, a federal deputy for Espírito Santo and member of the centrist Brazilian Democratic Movement Party (PMDB), was chosen as his running mate. In the beginning of the election cycle, Governor of Maranhão Roseana Sarney (PFL) looked to be the most viable centre-right candidate. However, a corruption scandal forced Sarney out of the race, allowing the PSDB to remain the paramount centre-right force in the 2002 cycle.

The election took place in the aftermath of an economic crisis that hit Brazil during Cardoso's second term. Lula's pivot to the centre worked, picking up the support of key centrist and centre-right politicians such as former President José Sarney in the process. In the first round, Lula would lead Serra by a wide margin, only failing to prevent a runoff because of votes that went to other left-wing candidates. In the second round, Lula would defeat Serra by a landslide, winning every state except for Alagoas. In 2003, Lula took office as President of Brazil, becoming the first leftist elected to the office following the fall of the military dictatorship in Brazil.

During the second term of the Fernando Henrique Cardoso administration, a serious economic crisis began in Brazil as an impact of the 1997 Asian financial crisis. Commencing shortly after the 1998 elections, when Cardoso was re-elected, as a currency crisis, it resulted in a decrease in growth and employment rates and a rise in public debt.

In an environment of distrust and uncertainty for investment, many investors feared the measures that were going to be taken if a left-wing candidate won the election. As a matter of fact, when Workers' Party candidate Luiz Inácio Lula da Silva (Lula) would rise in the polls, the so-called "Brazil risk" index, which measures the confidence of investors in the country, would also rise.

The media called this the "Lula risk", indicating that if Lula was to win the election, the economy would fail. Lula was then forced to sign a text that became known as Carta aos Brasileiros (Letter to the Brazilian people), promising that if he won the election, he would not change the economic policy of Brazil. Many in the left-wing saw this as a shift to the center from Lula and his Workers' Party, which openly defended a transition to socialist economy in the 1989 presidential election.

With incumbent President Fernando Henrique Cardoso ineligible to run for a third consecutive term due to term limits, the dominant centre-right PSDB was forced to find a new candidate for the 2002 election. Given that Cardoso was elected with the help of a broad centre-right coalition, there existed fear among PSDB officials that another candidate would be unable to maintain his coalition.