After an alleged assassination attempt on November 25, 2002, the Turkmen government arrested thousands of suspected conspirators and members of their families. Critics claim the government staged the attempt in order to crack down on mounting domestic and foreign political opposition.

The summer of 2004 saw a leaflet campaign in the capital, Aşgabat, calling for the overthrow and trial of Niyazov. The authorities were unable to stop the campaign and the President responded by firing his Interior Minister and director of the police academy on national television. He accused the minister of incompetence and declared: "I cannot say that you had any great merits or did much to combat crime."

Niyazov later announced that surveillance cameras were to be placed at all major streets and sites in Turkmenistan, an apparent precaution against future attempts.

On December 21, 2006, Turkmen state television announced that President Niyazov had died of a sudden heart attack. Niyazov had been taking medication for an unidentified cardiac condition. The Turkmen Embassy in Moscow later confirmed this report.

According to the Constitution of Turkmenistan, Öwezgeldi Ataýew, Chairman of the Parliament, would assume the presidency. Deputy Prime Minister Gurbanguly Berdimuhamedow was named as head of the commission organizing the state funeral. Due to the imprisonment of Öwezgeldi Ataýew who, under the Constitution is first in line to succeed the presidency, Berdimuhamedow was named as acting president. Berdimuhamedow and the Halk Maslahaty announced on December 26 that the next presidential elections would be held on February 11, 2007.

The circumstances of Niyazov's passing have been surrounded by some media speculation, including that Niyazov had been the victim of poisoning. Some Turkmen opposition sources also claim that Niyazov died several days before the officially announced date of December 21.

News reports also claimed that Niyazov also suffered from diabetes, ischemic heart disease and kidney failure.

Niyazov was buried in his ready prepared tomb in Kipchak Mosque on December 24 at his home village of Gypjak, approximately 7 kilometres west of Ashgabat. Prior to being moved to the village, Niyazov's body lay in state in an open coffin in the presidential palace. Many mourners, including foreign delegations, passed by the coffin in a three hour period. Many of the ordinary citizens were dramatically weeping and crying as they walked, some even clinging to the coffin and fainting, though there are rumors that they were "forced" to mourn in this way. Tang Jiaxuan, the Chinese State Councilor and special envoy of President Hu Jintao to Turkmenistan, Assistant U.S. Secretary of State Richard Boucher, Iranian Vice President Parviz Davoudi, Iranian Foreign Minister Manouchehr Mottaki, Kazakh President Nursultan Nazarbayev, Tajik President Emomali Rahmonov, Afghan President Hamid Karzai, Russian Prime Minister Mikhail Fradkov, Turkish Prime Minister Recep Tayyip Erdoğan, Georgian Prime Minister Zurab Noghaideli, Pakistani Prime Minister Shaukat Aziz, Ukrainian Prime Minister Viktor Yanukovych, Indian Prime Minister Manmohan Singh, and Armenian Prime Minister Andranik Margaryan attended the funeral.