In January and again in June, Gorbachev goes before the communists' Central Committee and proposes deep political and economic reforms. They include bringing a taste of democracy to some areas of society - including within the Communist Party. Perestroika is beginning in earnest.
By now the outside world is taking notice of the reformer, and wondering whether he can pull it off. His support inside and outside the USSR is high.
Perestroika moves from concept to best-seller, as Gorbachev publishes a book about his reforms in November. It goes on sale around the world.
But also in November, Yeltsin is forced out of his job as Moscow party boss. He has pushed for perestroika too far, too fast, and has criticised Gorbachev for moving too slowly.
The sacking leaves Yeltsin personally embittered against Gorbachev - a vital factor in future developments. Crucially for Yeltsin, Gorbachev allows him to stay on in Moscow, as deputy construction minister.