This paper deals with the free movement of workers in the context of EU enlargement with specific focus on the transitional period. The purpose of the paper is to present two main challenges Croatia will face in the accession negotiations of the chapter on free movement of workers: harmonization of legislation and a transitional period for the movement of its workers after the accession. With regard to legal harmonization, the paper gives an overview of the EU rules and Croatian legislation dealing with the free movement of workers. In order to explain the effect of the movement of workers in the enlarged EU on Croatia, it is necessary to look at the trends of labour migration in the EU and Croatia. The other important issue is the transitional arrangement agreed with the new EU member states, for a similar arrangement might be proposed to Croatia during accession negotiations.