Croatia became the 28th member of the European Union, capping a decade of judicial and economic overhaul to shed the remnants of communism and its wartime past.

Tens of thousands celebrated the entry of the second former Yugoslav republic into the EU with fireworks, five-story projections of its history and technology, concerts, dance performances and street parties across Zagreb. European Commission President Jose Barroso and other EU officials gathered at the central square as Croatian and blue-and-yellow EU flags fluttered in the evening breeze above revelers’ heads.

The Adriatic country, which emerged as an independent state in 1991 during the bloody breakup of Yugoslavia, is looking to EU membership to help solidify peace throughout the Balkan region as tensions still smolder in Bosnia-Herzegovina and Kosovo. Leaders are also counting on EU ties to lure foreign investors to the $63 billion economy and end four years of recession and stagnation....