This thesis argues that party system change during crises depends primarily on the actions of government and challenger parties. This stands in contrast to established theories of (long-term) party system change, which mostly emphasize structural factors. I find that stability or change depends on two major conditions. First, the parties habitually in government need to be discredited by their inability to solve the crisis at hand. Specifically, government parties disappoint when they implement policies which large parts of the electorate perceive as failing in terms of performance and representation. Second, it needs a challenger party which credibly challenges the mainstream (in message and style) and succeeds in communicating this to the electorate. If both conditions are fulfilled, a challenger party will make massive electoral gains, changing the party system’s degree of fragmentation significantly. Some of the European countries which were especially hard hit by the Great Recession experienced party system change, but some others did not. This puzzle serves to motivate this thesis empirically. It uses in-depth case studies and statistical analysis to explain why Italy, Spain and Greece saw the rise of challenger parties while Portugal and Ireland did not. The first part of the thesis examines the drivers of government party popularity. I track the influence of the economy, protests, policies and events on vote intentions for government parties, both with detailed case studies and statistical time series analysis. I find that popularity is primarily a function of austerity policies, specifically of those which directly curtail people’s disposable income. The second part of the thesis investigates challenger party supply, that is, it explains challenger party success as a function of challenger parties’ characteristics. Using a case study and cross-sectional statistical analysis of 74 challenger parties in five countries, I find that a challenger party must tout a straightforward solution to the crisis, employ anti-establishment rhetoric, and must dispose of a communication channel to contact voters repeatedly and on a large scale.