In the last two years the 58-year-old law professor has helped to shake off the country's status as Europe's pariah state, but now faces the prospect of losing his job.
With the Yugoslav Federation set to be replaced by a looser union - known simply as Serbia and Montenegro - Mr Kostunica, he has opted to run for the presidency of Serbia rather than that of the new union.
He goes into the second round on 13 October as the frontrunner.
Kostunica's life
1944: Born in Belgrade, son of army officer
Late 1960s-early 1970s: Studies law at Belgrade University
Married with no children
Politically, Mr Kostunica is seen as a moderate nationalist.
He has been campaigning on an anti-corruption platform, promising to cushion the social consequences of free-market economic reforms and to establish a solid, democratic legal framework.
He has won support among the poor and dispossessed after the Yugoslav wars of the 1990s, but it has also fuelled criticism that he is bad for business.
Nationalistic overtones
Mr Kostunica's Democratic Party of Serbia was one of an alliance of 18 opposition parties, which ousted former President Slobodan Milosevic.
Once in government, however, rivalry between Mr Kostunica and Serbian Prime Minister Zoran Djindjic became intense.
The two men have been at odds over issues ranging from co-operation with the United Nations war crimes tribunal in The Hague to economic policy.
Mr Kostunica's party is no longer a member of the ruling coalition.
Critics say he has blocked vital reforms and acted as a respectable front-man for many of the same hardline nationalists who once rallied around Mr Milosevic.
While advocating that Serbia join Europe and European institutions, he combines this with strong anti-Nato rhetoric.
Most recently, he raised European eyebrows when he said the Serbs of Bosnia were only "temporarily" separated from the "Serbian motherland" - comments he claimed were misunderstood.
However he has said that he is "no more nationalist thatn most centre-right European politicians".
He is also a harsh critic of the United Nations administration in the ethnic-Albanian-dominated southern province of Kosovo, which Serb forces evacuated after a Nato bombing campaign in 1999.
While he may be outspoken, his supporters see him as an honest man.
Power has not changed his lifestyle. He continues to live in a small apartment in downtown Belgrade rather than move to an official residence.