Scholars who argue for the compatibility of Islam with democracy tend to gloss over the fact that the separation of religion and state has not taken place in the history of the Muslim world. In fact, little research has been carried out on contemporary efforts to make this structural distinction, an imperative of the democratic state. I begin this article with an analysis of the nineteenth-century debates between Islamic scholars and European positivists and how they created a polarized perspective that frames Western secular tenets as inherently opposed to Islamic religious principles and that continues to the present day. I then examine the call by scholars and activists to separate religion and state in the Muslim world. Against this backdrop, I analyze the Bangladesh Supreme Court's decision in 2001 to declare the fatwa unconstitutional. I investigate to what extent this decree has led to the separation of religion and state and how it has influenced the future of political Islam in Bangladesh. Since fatwas target low-income rural women, I conclude by exploring the implication of this decision on notions of gender, Muslim identity, and citizenship in Bangladesh.