Over the past decade the contours of political party competition in Latin America have been dramatically altered by an upsurge of support for leftist–populist parties and the related weakening of established parties on the center and right end of the political spectrum. Drawing on both aggregate and individual-level evidence, this article explores the roots of this swing of the political pendulum. Contrary to the conventional wisdom, which attributes the rising “pink tide” to citizen dissatisfaction with market-oriented policies, economic performance, and/or social inequality, the analysis focuses on the role played by improving external economic conditions during the early 2000s, which relaxed the preexisting constraints on policy choice, enhanced the credibility of anti–status quo political actors, and created new opportunities for the pursuit of statist, nationalist, and redistributive political projects and associated challenges to U.S. hegemony. Consistent with this line of theoretical argument, the macro-level evidence indicates that the odds of electing a leftist–populist president in the region rose with improvements in the terms of trade. At the micro level, survey data also show that support for leftist–populist presidents in the region has been positively associated with citizen satisfaction with democracy and the state of the economy as well as with anti-Americanism. The results underline the potential significance of economic fluctuations for understanding electoral dynamics and party system change, particularly under conditions in which government policy choice is constrained by the operation of international markets.