Shaul Mofaz moved from the position of Defense Minister and received the Transport ministry in the new Cabinet installed on 4 May 2006. In 2008, with Israel's then prime minister, Ehud Olmert, being pressured to resign due to corruption charges, Mofaz announced that he would run for the leadership of the Kadima party. On 5 August 2008, Mofaz officially entered the race to be leader of Kadima. That same day he received a blessing by Shas spiritual leader Rabbi Ovadia Yosef. On 17 September 2008, he lost the Kadima party election, losing to Tzipi Livni for the spot of the Prime Minister
Tzipi Livni Livni and Shaul Mofaz emerged as the main rivals for the leadership. Livni won the Kadima leadership election by a margin of just 431 votes (1%). Palestinian peace negotiators were reportedly pleased with the result. As the new leader of the ruling party, Livni became prime-minister designate. Upon declaring victory, she stated "the national responsibility (bestowed) by the public brings me to approach this job with great reverence." On 21 September 2008, Olmert formally resigned in a letter submitted to president Shimon Peres, and the following day Peres formally asked Livni to form a new government. Livni faced tough negotiations