The Republic of Serbia has introduced special circumstances for the determination of sentence for hate crime in the Criminal Code amended in December 2012. If a criminal offence is committed through hate based on race or religion, national or ethnic affiliation, sex, sexual orientation or gender identity of another, the court shall consider any aggravating factors except when it is not stipulated as a feature of the criminal offence. However, the State still neglects to consider mitigating factors. Moreover, it does not pay sufficient attention to eliminating verbal expressions of hatred and discrimination that often precede crimes motivated by hate. The paper discusses the possibility of improving education and coordinated activities of the State, particularly of courts, prosecutors, police and local self-governments, to combat hate speech and hate crimes. The aim of the paper is to present mechanisms of improving institutional capacities to prevent these phenomena that have been implemented within the project “Implementation of Anti-Discrimination Policies in Serbia” financed by the European Union. The paper concludes that central to the success of this process are the education of state actors, and the development of a value system based on equality and acceptance of diversity.