The agrarian reform in Albania included free distribution of land to rural households and the complete break up of the former collective and state farms. These key features of the Albanian reform are in sharp contrast with other Central and Eastern European countries. Our paper explains the choice of the Albanian agricultural privatization and land reform process and the radical decollectivization of the farms as caused by a combination of several factors, including changes in political institutions, the structure of the economy, the legal status of assets under privatization, farm productivity, and the pre-1945 land distribution.