This paper provides a quantitative and qualitative evaluation of Serbia’s packaging waste management system, which is based on the Extended Producer Responsibility scheme (EPR). Additionally, it identifies and discusses the major challenges faced by the system. This paper strives to shed some light on the challenges posed by the implementation of an advanced and highly institutionalized approach to packaging waste management in the context of a European Union candidate country. The analysis indicates that Serbia is a country with an evolving administrative and institutional approach to packaging waste management, which can reach national recovery targets through its EPR system. The main challenges that must be addressed for the system to continue progressing in order to meet European Union’s recovery targets are: (i) increase the low supply of recovered recyclables from the municipal solid waste stream, (ii) close loopholes affecting recycling industry and work of National Recovery Organisations, and (iii) formalization of informal recycling sector’s role within the formal packaging recovery framework.