The main topic of this final paper was to research the role, importance and influence of institutional investors on the financial market of the Republic of Croatia. Therefore, the goal of this paper was to provide a basic insight and knowledge of forms, functions, importance and impact of institutional investors through the theoretical part. Subsequently, by analyzing the data on the condition of assets and its allocation, the goal was to show the proportions of institutional investors' impact on the financial market of the Republic of Croatia with regard to the size of their assets and porftolios in which they invest their assets within observed periods. Institutional investors invest small investor's savings in order to achieve a certain yield rate at a certain rate of risk. We distinguish four forms of institutional investors and those are commercial banks, pension funds, insurance companies and mutual funds. Their functions refer to pooling and transferring funds of small investors, risk management, providing information, solving challenges which small investors would face if there weren't of institutional investors as intermediaries and finally, enabling the financial market to progress. Through these functions they influence liquidity, competitivness, demand for capital market instruments, financial innovations, etc. The largest share of institutional investors' assets refers to commercial banks. The second largest share of assets refers to pension funds, followed by insurance companies and mutual funds. Business banks invest most of their funds into loans, while pension funds, insurance companies and investment UCITS funds invest most of their funds into securities. Based on research results, it is concluded that the significance and thus the role of institutional investors in the financial market is increasing, due to the increase in the value of their assets. Also, it is concluded that more and more of assets are being allocated into securities than in other forms of investments.