Democracy is a much used and abused word. As a possible structure of political organization, democratic concepts are very much under debate in Muslim countries. Democracy in a western sense has become associated with a forceful “democratization” of the Middle East, which in effect has brought war and various forms of foreign domination to crucial areas of this sensitive region. However, up to now democratic structures are an exception in Muslim countries. Due to historical developments during the past centuries, there seems to be a lack of theoretical backing for democracy in the culture of the Middle East. This is surprising, because Islam, from its beginning, has offered the model of shura (consultation), which can and should be developed to serve modern governance. Especially Shi'ism can offer a theological backing through interpretations and explanations conducive to the formation and implementation of an Islamic democracy. In Imam Ali's (a.s.) letter to Malik al-Ashtar, we find a beautiful outline of what today is called “good governance”. Moreover, Shi'ism postulates the Imamate of the Mahdi (a.s.) as a just rule to-come. In the absence of the Imam-e zaman, an Islamic democracy should prevail with full participation of Muslims. But how is it possible to organize a modern Muslim country democratically? In addition to a working government and a majlis or parliament formed on the basis of elections, the expertise of religious scholars is needed – scholars who are capable of Ijtihad, so that they can find answers to the needs of present-day life in the wake of ongoing social change. In an Islamic polity, the period of awaiting al-Mahdi al-muntazar requires active participation of the people, since unless there is widespread readiness to support the good cause, the Mahdi will not appear. This participation is a basic human right and also a duty of men and women. For this purpose, every individual should have the opportunity to develop his/her moral, religious and cultural consciousness and the social and political awareness through education and self-education, so that citizens may fulfil their social and democratic responsibilities within the framework of Islam.