From then on the potential for full-scale conflict steadily increased.

During 1998, open conflict between Serbian military and police forces and ethnic Albanian forces in Kosovo resulted in the deaths of over 1500 ethnic Albanians and displaced 350,000 people from their homes. NATO countries became gravely concerned about the escalating conflict, its humanitarian consequences and the risk of it spreading to other countries in the region. In October 1998, NATO initiated a phased air campaign against Yugoslavia, designed to force the Milosevic regime to withdraw some of its forces from Kosovo, cooperate in bringing an end to the violence and facilitate the return of refugees to their homes in accordance with UN Resolutions calling for these and other measures. At the last moment, following further diplomatic initiatives, President Milosevic agreed to comply and the air strikes were called off.

The United Nations, concerned about the excessive use of force by Serbian security forces and the Yugoslav army, called for a cease-fire by both parties to the conflict. Limits were set on the number of Serbian forces in Kosovo and on the scope of their operations, following a separate agreement between the government in Belgrade and NATO.

It was agreed, in addition, that the Organisation for Security and Cooperation in Europe (OSCE) would establish a Kosovo Verification Mission (KVM) to observe compliance on the ground and that NATO would establish an aerial surveillance mission. The establishment of the two missions was endorsed by the United Nations. Several non-NATO nations agreed to contribute to the surveillance mission. NATO established a special military task force to assist with the emergency evacuation of members of the KVM, if renewed conflict should put them at risk. During 1998 the situation stopped short of full-scale war but flared up again over allegations and counter-allegations over the repressive role of the Serbian authorities in relation to the people of Kosovo and the uncompromising attitude of the Kosovar independence fighters. In January 1999, following an escalation in the Serbian offensive against ethnic Albanians and the massacre of over 40 civilians in the village of Racak, the situation deteriorated further.

Through concerted initiatives culminating in negotiations in Rambouillet near Paris, the international community sought to pave the way for a long-term political solution to the conflict. Such a solution would have to ensure a greater degree of autonomy and self-administration for Kosovo, while preserving the territorial integrity of the Federal Republic of Yugoslavia (Serbia and Montenegro).