In the fall of 1999, Olsen signed a two-year contract with the Danish Football Association (DBU) to manage the Danish national team, effective after Denmark's participation at the 2000 European Championship. In July 2000, he replaced Swedish coach Bo Johansson as the manager of the Denmark national football team. As his assistant coach, Olsen chose Michael Laudrup. The duo guided Denmark to qualification for the 2002 FIFA World Cup tournament, a campaign which ended in the round of 16 match against England in a 0–3 defeat after Denmark won the initial stage group. Prior to the 2002 World Cup, Olsen signed a new four-year contract until June 2006. When Laudrup went on to coach Brøndby IF, Olsen chose Keld Bordinggaard as his new assistant coach. With Bordinggaard, Olsen guided Denmark to the 2004 European Championship tournament, which once again ended at the first knock-out stage. Olsen failed to qualify Denmark for the 2006 FIFA World Cup, but prolonged his contract with DBU in November 2005. A part of the new deal, which ran until and including the 2010 FIFA World Cup, was the added responsibility of defining a "red thread", or common denominator, in the talent work of the Danish national youth teams, thus giving Olsen a large influence on the future football being played by Denmark.