The Australian Labor Party, under Neville Wran and, since 1986, Barrie Unsworth, had been in office for 12 years. A number of corruption scandals had tarnished Labor's image. Among these was the jailing of Labor's Minister for Corrective Services Rex Jackson in 1987 for accepting bribes for the early release of prisoners. Signs that voters had turned against Labor were evident in two by-elections in 1986. When Unsworth, then a member of the New South Wales Legislative Council, ran for the previously safe Labor Assembly seat of Rockdale in 1986, he only won it by 54 votes after a 17% drop in primary votes. Additionally, Wran's old seat of Bass Hill was lost to the Liberals on a 103-vote margin. However, by-elections in Heathcote and Bankstown in 1987 saw only small swings against the government.
The Liberals' campaign slogan was "A change for the better". Greiner campaigned on a promise to clean up state government, foreshadowing the establishment of the Independent Commission Against Corruption, as well as promising to freeze government expenditure, create 16,000 new employment and training positions, and pay more attention to law enforcement.
In rural electorates, Labor's positions on gun laws and conservation alienated many voters. Health care was also a campaign issue.
The result was a landslide for the Coalition parties. Election analyst Antony Green later noted that "the 1988 result was startling, the worst Labor performance, and best Coalition result, since the Lang era of the 1930s." Labor lost heartland seats including Balmain, Newcastle and Swansea for the first time since the turn of the century.
Seven non-aligned Independents were elected to the Legislative Assembly.