The paper discusses the inflows of foreign direct investment into the CEE countries and focuses on analysis of productivity spillovers. Overview of the relevance of foreign firms in the CEE economies is presented. Using firm-level data on manufacturing industries for the period 2000-2005, total factor productivity of domestic firms is estimated using Petrin and Levinsohn (2003) method and subsequently related within a panel data model to foreign presence in the same industry and in the industries linked via production chain. Presence of productivity spillovers is tested across several breakdowns to detect possible conditionalities.