The party's reins have been taken by Jadranka Kosor, the French AFP news agency recalling that President Stjepan Mesic gave a mandate to Kosor to form a new government on Friday evening.
AFP said Kosor's "mentor" Sanader on Wednesday resigned explaining that the blockade's of Croatia' European Union accession negotiations by Slovenia over their border dispute had partly contributed to his decision on withdrawal.
That news agency quoted some analysts saying that ultra-right wing could now dominate the party.
The German dpa agency said that HDZ on Saturday elected "prime minister-designate Jadranka Kosor as the party's new head after the surprise resignation of Ivo Sanader."
The dpa said that during her premiership Kosor will have "to take on the difficult task of bringing Croatia through the financial crisis, which has hit this Adriatic country hard."