On 6 June 2008 he was again stopped at a police checkpoint and blocked from attending a pre-election rally at How Mine, near the southern city of Bulawayo. According to the chairman of the Movement for Democratic Change, Lovemore Moyo, the police said they should have informed them in advance of Tsvangirai visiting the area.
In May 2008, Tsvangirai met Raila Odinga, the then Prime Minister of Kenya, who urged him to contest an election run-off against Mugabe.
A presidential election and parliamentary election was held on 29 March 2008. The three major candidates were Mugabe, Tsvangirai and Simba Makoni, an independent.
The MDC photographed data at each polling station to collate for electoral results. The official results of the presidential election's first round were finally released on 2 May 2008 and hotly contested by the MDC representatives. According to the results released by the Zimbabwe Electoral Commission, Tsvangirai won the first round, amassing 47.9% of the votes against 43.2% claimed by Mugabe. This meant that no candidate had the necessary 50% plus one vote to be declared the winner after the first round and a run-off would be needed. MDC spokesperson Nelson Chamisa called the announced results "scandalous daylight robbery." The MDC continued to assert that it won an outright victory in the first round with 50.3% of the votes.
On 13 May 2008, Tsvangirai stated that he would be willing to compete in the run-off if at least Southern African Development Community election observers would be present, softening his previous demand for free access to all international observers. It was subsequently announced that the second round would be held on 27 June; the MDC denounced this delay.
On 22 June 2008, Tsvangirai announced at a press conference that he was withdrawing from the run-off, describing it as a "violent sham" and saying that his supporters risked being killed if they voted for him. He vowed that the MDC would ultimately prevail and that its victory could "only be delayed.". Shortly after making this announcement, Mr Tsvangirai sought refuge at the Dutch Embassy in Harare, citing concerns for his safety. He did not seek political asylum.
On 22 July 2008, Tsvangirai and Mutambara met Mugabe face-to-face and shook hands with him for the first time in over a decade for negotiations in Harare, orchestrated by Mbeki, aiming for a settlement of electoral disputes that would share power between the MDC and the ZANU-PF at the executive level.
In the signed historic power deal, Mugabe, on 11 September 2008 agreed to surrender day-to-day control of the government and the deal is also expected to result in a de facto amnesty for the military and ZANU-PF party leaders. Opposition sources said "Tsvangirai will become prime minister at the head of a council of ministers, the principal organ of government, drawn from his Movement for Democratic Change and the president's Zanu-PF party; and Mugabe will remain president and continue to chair a cabinet that will be a largely consultative body, and the real power will lie with Tsvangirai. South Africa's Business Day reported, however, that Mugabe was refusing to sign a deal which would curtail his presidential powers. The New York Times said Nelson Chamisa, a spokesman for the opposition Movement for Democratic Change, announced: "This is an inclusive government. The executive power would be shared by the president, the prime minister and the cabinet. Mugabe, Tsvangirai and Mutambara have still not decided how to divide the ministries. But Jendayi E. Frazer, the American Assistant Secretary of State for African Affairs, said:
On 15 September 2008, the leaders of the 14-member Southern African Development Community witnessed the signing of the power-sharing agreement, brokered by South African leader Thabo Mbeki. With symbolic handshake and warm smiles at the Rainbow Towers hotel, in Harare, Mugabe and Tsvangirai signed the deal to end the violent political crisis. As provided, Mugabe remained president, Tsvangirai became prime minister, the MDC took control of the police, Mugabe's ZANU-PF retained command of the Army, and Mutambara became deputy prime minister.