Chiles retired from the Senate in 1989 and intended to retire from politics entirely. However, several supporters convinced him to enter the 1990 Florida Governor’s race against Republican incumbent Bob Martinez. During the Democratic Party primary, his opponent Bill Nelson attempted to make an issue of Chiles’ age and health, a strategy that backfired badly in a state with a large retiree population.
Chiles ran a campaign to “reinvent” the state’s government, and defeated Martinez to take office in 1991. Although he developed ambitious health-care and tax reform packages, neither passed in the hostile state legislature. The early years of his term were troubled by a national economic recession that severely damaged Florida’s tourism-based economy, and by Hurricane Andrew, which struck near Homestead in August, 1992. Chiles moved the operational center of the Governor’s office to South Florida after the hurricane and remained there for weeks to oversee the clean-up.
Chiles ran for re-election in 1994 against Jeb Bush whom he narrowly defeated. Chiles’ second term as Governor was notable as the first time in state history that a Democratic Governor had a legislature controlled by the Republican Party. Despite this, he had some successes, including a successful lawsuit he and state Attorney General Bob Butterworth filed against the tobacco industry, which resulted in an $11.3 billion settlement for the state. He also won approval for a $2.7 billion statewide school construction program.
In 1995 Chiles sought treatment for a neurological problem, after he awoke with nausea, slurred speech, and loss of coordination. He recovered fully.
Ineligible to run a third time, Chiles supported the Lieutenant Governor, Kenneth H. “Buddy” MacKay, in the 1998 Florida governor’s race against Jeb Bush. Bush, however, scored an easy victory over MacKay. On December 12 that year, just three weeks before his long-awaited retirement was to begin, Chiles suffered a fatal heart attack while exercising on a cycling machine in the Governor’s mansion gymnasium. Funeral services were held at Faith Presbyterian Church in Tallahassee, following a funeral procession that traced part of his walk from the 1970 Senate campaign, from the panhandle town of Century to Tallahassee. He was succeeded in office by MacKay, who served until Bush’s term began on January 5, 1999.