In the late 1980s, the Soviet Union was among the foremost leaders of world science, thanks in large part to its heavy involvement in military programmes. The USSR developed a large research infrastructure but it lacked effective mechanisms for the commercialization of research results. The main aim of the transformation of R&D systems in the post-Soviet states in the 1990s and early 2000s was the re-orientation of scientific activities away from military and towards civilian goals. Analysis of statistical data at the macro-level suggests that this attempt was not particularly successful. Indeed, most newly independent states could not even preserve a ‘critical mass’ of scientific activities in order to remain among the list of significant producers of research results. In the post-Soviet countries (and in this paper we focus on Russia and Ukraine as the largest states of the region), inputs from the R&D system have failed to generate wealth-creating outputs because of a systemic inability to use the resources for generating commercially viable results effectively. All post-Soviet countries, including Russia and Ukraine, urgently need not only a major transformation within the R&D system, but also important changes in the wider ‘environment’. It is important to stress that, in recent years, changes in R&D have been determined not only by the general economic situation itself but also by the general policy of the post-Soviet states. While Russia has expressed ambitions to regain its former influence as a great power and to use S&T to achieve this goal, Ukraine has no clearly determined objectives for the development of its national science system. However, both countries face certain common problems. The development of relevant institutes and the stimulation of demand for R&D results from the side of industry, broader involvement in the international division of scientific work, and the introduction of adequate legal protection for intellectual property rights are all of critical importance for S&T institutes and other research organizations in Russia and Ukraine. This paper shows that the reforms in the R&D sector have been relatively modest and rather unsystematic over the last one and a half decades. The key challenges, which relate to the inertia and the negative aspects of the previous period (for example, a extremely low level of replacement of aging manpower, largely outdated scientific equipment in research laboratories, and institutional mechanisms that are not relevant to the market economy), pose serious problems for the transformation of the R&D systems in both countries, despite new possibilities and a willingness to increase financial support for R&D.