The article is devoted to the evolution of the West European social democracy in the late 20th and early 21st century. The author analyses the causes of the social democracy crisis in 1980-90s and considers its attempts to meet the challenges of globalization and the “new economy”. Modernization of the British Labour Party under Tony Blair's leadership and updating of the German Social Democratic Party initiated by Gerhard Schröder are thoroughly examined in the article. Political and ideological processes ongoing in such parties as the French Socialist Party, the Dutch Labour Party, the Swedish Social Democratic Party, the Austrian Social Democratic Party are also considered. The author comes to a conclusion that the radical shift towards social liberalism took place merely in the British Labour Party. Schröder’s attempt to modernize the German Social Democratic Party turned out to be unsuccessful, while other European social democratic parties did not regard Blair’s “Third Way” as a suitable model for them.