Hagan, initially an unknown politician, decided to challenge incumbent Republican Senator Elizabeth Dole.
National Democrats at first encouraged incumbent Governor Mike Easley to make the race. A late October 2007 Rasmussen Report poll showed Easley defeating Dole 50% to 42%. Easley declined to run, as did Congressman Brad Miller, who expressed interest in early 2007. Former Governor Jim Hunt also declined to compete against Dole.
Neal earned the endorsement of the Black Political Caucus of Charlotte-Mecklenburg. He also was endorsed by Blue America PAC, eQualityGiving, the Independent Weekly and YES ! Weekly.
Dole was initially a heavy favorite for reelection, especially after several potential top-tier challengers such as Congressman Brad Miller, Governor Mike Easley and former Governor Jim Hunt all declined to compete against Dole. Ultimately, Kay Hagan, a state senator from Greensboro, won the Democratic primary election and became Dole's general election opponent. Reports late in the campaign suggested that Dole, once considered a safe bet for reelection, suffered from Barack Obama's decision to aggressively contest North Carolina in the presidential election.
Hagan was initially given little chance against Dole, but Hagan was helped by independent 527 groups lobbying/advertising against incumbent Dole  The Democratic Senate Campaign Committee has expended more money in North Carolina than in any other state during the 2008 election season. However, Dole benefited from more out-of-state funding overall than Hagan.
In late October, Dole released a controversial television ad attacking Hagan for reportedly taking donations from individuals involved in the Godless Americans PAC, a group which advocates for the rights of people who do not believe in God. The ad also included a female voice saying, "There is no God." The Dole campaign said the ad correctly shows who Hagan will associate with in order to raise campaign funds, and on November 1, Bob Dole also defended it, asserting that "it never questions her faith," and that "the issue is why she was there. There's no question about her faith. I think it's [the ad's] fair game."
Hagan, who is a member of the Presbyterian Church and a former Sunday school teacher, condemned the ad as "fabricated and pathetic," and, according to Hagan's campaign website, a cease-and-desist letter was "hand-delivered to Dole's Raleigh office, faxed to her Salisbury office and sent to her home at the Watergate in Washington, DC." Hagan also filed a lawsuit in Wake County Superior Court accusing Dole of defamation and libel.
The ad has met exceptionally strong criticism from the public as well as many local and several national media outlets. CNN's Campbell Brown said about the ad: "[A]mid all the attack ads on the airwaves competing to out-ugly one another, we think we've found a winner." The ad has been described as "ridiculously outrageous," "indecent," a "gross misrepresentation," "worse than dishonest" and "beyond the bounds of acceptable political disagreement," among other harsh criticism. Another ad issued by the Dole campaign in mid-October 2008 was described by The Fayetteville Observer as "[setting] the low mark in negative political campaigning." The media reported, that within 48 hours of the first ad Hagan received over 3,600 contributions, including major donors as well as individual support from a range of atheists, agnostics and followers of other religious beliefs who felt they were being attacked by Dole. Following the second ad Hagan's lead doubled according to some polls.
In June 2008, Senator John Ensign of Nevada, the chairman of the National Republican Senatorial Committee, considered North Carolina to be one of the top ten most competitive Senate races of the year. Later, CQ Politics rated this race as 'Leans Democratic'.The Cook Political Report called it a 'Toss-Up'.The Rothenberg Political Report considered it a 'Lean Takeover'.
In the 2008 election, Dole lost by a wider-than-expected margin, taking only 44 percent of the vote to Hagan's 53 percent – the widest margin for a Senate race in North Carolina in 30 years, and the largest margin of defeat for an incumbent Senator in the 2008 cycle. It has been speculated that the outcry over the "Godless" ads contributed to Dole's loss. Hagan trounced Dole in the state's five largest counties – Mecklenburg, Wake, Guilford, Forsyth and Durham. Hagan also dominated most of the eastern portion of the state, which had been the backbone of Helms' past Senate victories. While Dole dominated the Charlotte suburbs and most of the heavily Republican Foothills region, it was not enough to save her seat.
^Kraushaar, Josh. Hagan's campaign says the ad sought to put inflammatory words in their candidate's mouth; The Dole campaign says the ad correctly shows who Hagan will associate with in order to raise campaign funds.Dole still keeping the faith. The Politico. October 29, 2008.