The article focuses on three factors of institutional environments and their influence on development of mediation as a dispute resolution mechanism and as an institution in Ukraine. The highly volatile political and economic environment has not allowed the mediation movement to gain full political support with the Government and the judiciary. A settlement-friendly legal framework, although providing stable foundation for mediation, decreased the urgency of adoption of the law on mediation which in turn delayed nation-wide acceptance of mediation institutions. Finally, the relatively high efficiency of Ukrainian courts coupled with their perceived corruptibility suggested a low systemic self-interest of the courts in efficiency-raising mechanisms such as mediation. These institutional preconditions have generally slowed down mediation reforms and lead Ukraine to remain on the sidelines of the global mediation movement.