Of the numerous direct democracy instruments present in the Latvian Satversme, one of the most interesting solutions is the mechanism of a referendum concerning dissolution of the parliament, initiated by the head of state. A spectacular, and so far the only, example of application of this mechanism was the referendum held on 23 July 2011, as a result of which the Latvian Saeima was dissolved. The article analyzes the constitutional provisions that define this form of direct democracy, taking into account the Latvian political practice. The article focuses on the application of this institution in 2011 and emphasizes the associated social and political conditions. On the background of the Latvian constitutional and political system, in particular the mutual relations between the President of the State and the Saeima, the article presents the importance of this instrument to the Latvian political system and an evaluation of its potential with regard to the system of government.