In 1991, Croatia declared independence from the rest of Yugoslavia.
Serbs who lived in Croatia were worried they would lose out and turned to Milosevic for help.
There was a lot of cruel and bitter fighting, and by the end of 1991, the Serbs had taken control of a third of Croatia.
But although they were winning the fight, thousands of soldiers had died and lots of other countries refused to trade with Yugoslavia, because they didn't agree with the fighting.
These are called 'sanctions' and can cripple a country and make it poor.