The paper summarizes the recent history of Russian population’s sudden immersion into the market economy and the ensuing transformation of social service under neoliberalism. The main problems that arose during the transition from the former Soviet paternalistic model to the modern neoliberal model of social services from 2005 to 2016 are analyzed. Changes in Russia’s social sphere due to the adoption of the new Federal Law 442-FL of January, 2015 ‘On the Basics of Social Services for Citizens in the Russian Federation’ and the permitting of private for-profit service providers on an equal basis with State structures are discussed. Advantages and disadvantages of neoliberal transformations in social services and social work are also examined.