The dominant perception in the 19th and 20th centuries seemed to indicate that the march of modernity would lead to the marginalization of the role of religion in the public sphere, including in the realm of politics. Many scholars of international politics and International Relations (IR) have also argued along the same lines. The emergence of a strong counter-trend, a religious-based outlook, since the early decades of the 20th century, especially in the waning decades of the century, appeared to challenge that seemingly entrenched conviction. The establishment of the Islamic Republic of Iran in 1979 – as full-fledged religious state – served as the climax of that counter-trend with significant implications and repercussions, for the region, for the Muslim world, and also for international relations. The present essay is an attempt to look into these issues. It will be argued that the new religious counter-trend, particularly the revival of Islam, represents a process across the Islamic world geared to the preservation and revival of the Islamic identity, and also relying on Islam and its teaching to shape and guide governance in Muslim lands. The essay will also try to have a look at some of the challenges involved in the process; that is, the challenges Islamic governance will face in dealing with others – the dominant secular international system and its components.