Abstact.  This article examines the dynamics of the privatization of state security and policing in post-Soviet Lithuania. Two periods in the evolution of the industry, each with its distinct set of actors, dynamics, and types of services offered are defined and analyzed. In the early 1990s the private security industry was characterized by competition, coercion and negotiations among private protection organizations (or criminal rackets) and four different factions of downsized ex-Soviet military, security and the police force personnel. Since the late 1990s a consolidation and dramatic expansion of the industry has occurred as private security firms, national as well as transnational, emerged as the dominant institutional form of private security provision in the country. The article agues that the restructuring and growth experienced by the security industry since the late 1990s are only indirectly related to a significant increase in crime throughout the region during the post-independence period. Broader socio-economic and regulatory changes are analyzed in order to explain the restructuring and exponential growth of the industry. The contribution made by private firms to the security and stability of the country are discussed, alongside the problems associated with a rapid growth of private policing in Lithuania.