Foreign aid flows have increased considerably during the last decades targeting, apart from the economic development of recipients, several goals related to their democratization process. In this paper we investigate whether aggregate aid flows affect the transition of recipient countries to democracy. To this end, we introduce a two-stage binary response model and we use annual data on Net Official Development Assistance covering the period 1967-1999 for 64 aid-recipients. We find robust evidence that aid flows are negatively associated with the likelihood of democratization in the recipient country and that this adverse effect of aid is stronger in countries with bad economic and social conditions. We also find some evidence that the negative effect of aid on the political regime is moderated when aid flows are accompanied by economic liberalization.