Undoubtedly, the process of nation-state building has been one of the most significant challenges faced by many countries across the world, particularly in Islamic nations, over the past century. This issue is so critical that it can be argued that the primary root of insecurity and instability in many of these countries lies in the weakness and ongoing crisis of nation-state building, especially in states that function as quasi-states or post-colonial entities. In such circumstances, the inability of these states to provide the basic functions of statehood has paved the way for insecurity, instability, and both internal and international conflicts. Iraq stands as a prime example of a failed state, struggling to transition through the process of nation-state building, and as a result, it has faced multiple domestic and foreign challenges. This paper seeks to evaluate the complexities and obstacles of nation-state building in Islamic countries, with a particular focus on Iraq. The analysis highlights several major challenges hindering the successful establishment of a cohesive nation-state in Iraq, including the historical roots and barriers preventing the formation of a unified national identity, the deep ethnic and sectarian divisions, external interventions, and the failure of governance, particularly in the post-Saddam era of consociational democracy.