Recent political developments in Iran, Turkey, Egypt and Algeria, among others, suggest the possible emergence of an indigenous Islamic path of democratic formation. However, the conventional western interpretations, of religion, and in particular of Islam, leave little room for the recognition of the actual, complex development of such Islamic countries. Defining Islam and modernity as two more or less incompatible phenomena fails to recognize the potentialities of developing modern democratic Islamic societies with their cultural elements and particularities. Many Muslim countries themselves fail to see or are unwilling to recognize their own civil societies and their dynamic potentialities and to accept, in Locke's term, ‘the sovereignty of civil society’. Although the notion of a traditional civil society in the Islamic countries is controversial, I contend that neither individualism nor democratic institutions have been or are necessary for a civil society to exist. The basis of a civil society is the existence of influential civil groups and their institutions that can, through established mechanisms counterbalance state power. Analyzing civil society in Muslim countries requires that we recognize Islam not only as a religion, but also as a political theory and the major source of a legitimization of political power.