Since the early 1990s, the Middle East has witnessed a renewed interest in the debate over the role of religion in the process of democratization. This study aims to examine the possibility of developing a democratic discourse within the Islamic context. It focuses on the evolution of the political thought in Shi'i Islam in the context of Iran after the Islamic revolution of 1979. The reconciliation between religion and democracy is argued to be a two-phase process: in the first phase, religion is integrated into the state in order to bring about a consensual political system and engage the people in the political process. Then, the religious worldview is developed in line with democracy. The study examines the socio-economic factors behind the emergence of the reformist discourse in Iran in the mid-1990s. It also reviews the evolution of that discourse compared with its conservative rival and highlights their approximate to the principles of democracy. Emphasizing the practical side of religion, the thesis concludes that the community's perception and application of the religious teachings have varied over the history to reflect the changing realities of the social life, far from the claim of religion being a fixed order of dogmas. The past twenty-five years witnessed major steps towards adapting the religious values to the modern patterns of socialization and politics. It was set off by the need of unifying the religious and political authorities within the state system. Later, the process was driven by the structural transformations ensued from the revolution and the state policies during the 1980s. The final phase came through the reformist's strategy to democratize the Islamic regime in the late 1990s. My general conclusion is that despite the tremble of the political reform, considerable works have been done, particularly on the structural level. The experience of the reformist rule indicates the possibility of developing a model of democracy appropriate to the local culture, especially the religious beliefs. It also indicates the capacity of the Islamic Republic to develop a democratic character, at least on the long term.