Azerbaijan can rightly claim to be among the most progressive and secular Islamic societies. Aside from having been the first Muslim country to have operas, theater plays, and a democratic republic, Azerbaijan today is among the Muslim countries where support for secularism is the highest, and where radical ideologies have met only very limited interest. Yet in the past several years, Islam has clearly made a come-back in Azerbaijan. This has been a generally benign and positive factor, providing a reconnection to values and traditions for a nation liberated from seventy years of atheism and Russification policies before that. Accompanied to this has nevertheless also been a rise of radical Islamic groups, many of which guided by external influences. This study has led to the conclusion that a politicization of Islam is taking place in Azerbaijan. Radical groups remain weak, but have a potential to grow under the current domestic and international circumstances. To confront this, the Azerbaijani state needs to address the diarchy in terms of supervision of religious structures. Adopting a structure modeled on the Turkish Directorate for Religious Affairs is one possible approach to resolving the current deadlock. In addition, Azerbaijan needs to develop a clergy with both religious legitimacy and respect for secularism, something that is absent today, by increasing the avenues for religious training at home rather than abroad. Addressing long overdue reform in the educational sector remains a high priority, in which the development of a curriculum in the humanities, including history of religions and civilizations, is crucial.