Mr Obasanjo never said whether he wanted to stay in office
Nigeria's political future has been thrown up into the air after the Senate's rejection of a bill which would have let President Olusegun Obasanjo contest elections due next year.
The "third term debate" has gripped the country in recent months and the vote was greeted by cheers in the Senate.
Why would changing the constitution be so controversial?
Nigeria has had many years of military rule, which only ended in 1999, when Mr Obasanjo won elections.
Opponents of the move to scrap the two-term limit say it would weaken Nigeria's new democracy. Some spoke of a return to dictatorship.
In Nigeria - and many African countries - the power of the incumbent is extremely strong.
So people feared that if Mr Obasanjo was allowed to stand in the polls, he would inevitably win.
Is there no way back?
At the moment, it seems not.
Both the Senate and the House of Representatives would have to vote by a two-thirds majority merely to reintroduce the bill, let alone pass it.
But in politics, especially in Nigeria, you should never say never.
So who will stand for the ruling party?
With the power of incumbency, the contest to secure the People's Democratic Party (PDP) nomination rather than next year's poll, may be crucial.
But the debate has divided what was already a coalition of many different groups.
Vice-President Atiku Abubakar has strongly indicated that he would like to move up to the top job.
Mr Abubakar would like to be the ruling party candidate
But he has been associated with a new opposition party and his open criticism of supporters of Mr Obasanjo may make it difficult for him to reunify the party behind him.
Of course, he could leave the PDP, along with his supporters, and contest on another ticket but that might weaken his chances.
Another strong candidate is former military ruler General Ibrahim Babangida, who has been seen as a kingmaker in the PDP.
In the last election in 2003, the opposition complained of fraud - allegations backed to some extent, especially in parts of the south and south-east, by foreign observers.
This is one reason why the PDP contest might prove crucial.
What about the opposition?
In 2003, another ex-military leader, Muhammadu Buhari, got a respectable result behind Mr Obasanjo and he may want to try again.
But Mr Abubakar, Mr Buhari and Gen Babangida are all veteran politicians from the mainly Muslim north.
There might be a feeling that they are all competing for the same constituency and they could do a deal for just one of them to stand as a very strong compromise candidate.
What about other areas?
Nigeria is divided into some 250 ethnic groups and a history of tension between the Muslim north and the Christian and animist south.
Some people from the oil-producing south and the south-east - areas which have never produced a Nigerian leader - feel it is their turn.
If those regions could agree on a single candidate to represent them, without alienating other regions, he or she would be in a strong position.
The BBC's Alex Last in Lagos says the next few months will see an exciting and interesting power struggle.
Is there likely to be any trouble?
This is a fear, as politicians could be tempted to exploit existing ethnic and religious tensions in an attempt to build up their support bases.
Before the 2003 elections, there was a noticeable increase in communal clashes.
The Niger Delta in the south has already been hit by instability, as militants attack oil installations as part of their campaign for more of Nigeria's oil wealth to be kept in local hands.
This could intensify in the run-up to the poll.
Some of the militants are reported to have started causing trouble after not being paid by politicians for helping to rig the 2003 election.