Islam is the majority religion in Azerbaijan, but the country is considered to be the most secular in the Muslim world. Various reports have estimated that 97.3% (CIA, 2020) or 99.2% (Pew Research Center, 2006) of the population identify as Muslim, with the majority (60-65%) being Shias and a significant minority (35-40%) being Sunnis. Traditionally, the differences between these two branches of Islam have not been sharply defined in Azerbaijan, as a major portion of the population are cultural Muslims.

Most Shia Muslims in the country follow the Ja'fari school of Shia Islam, while Sunni Muslims typically adhere to either the Hanafi or Shafi'i school. Due to many decades of Soviet atheist policy, religious affiliation in Azerbaijan is often nominal, and Muslim identity tends to be based more on culture and ethnicity than on religion. Shia Islam is prevalent in the western, central, and southern regions of the country. Traditionally, villages around Baku and the Lankaran region are considered Shia strongholds. In contrast, Sunni Islam is dominant in the northern regions.

Islam arrived in Azerbaijan with Arabs in the seventh century, gradually supplanting Christianity and pagan cults.

In the sixteenth century, the first shah of the Safavid Dynasty, Ismail I (r. 1501-1524), established Shi'a Islam as the state religion, although a portion of people remained Sunni. The population of what is nowadays Iran and what is nowadays Azerbaijan were converted to Shia Islam at the same moment^{[clarification needed]} in history.^{[page needed]}

As elsewhere in the Muslim world, the two branches of Islam came into conflict in Azerbaijan. Enforcement of Shi'a Islam as the state religion brought contention between the Safavid rulers and the ruling Sunnis of the neighboring Ottoman Empire.

In the nineteenth century, many Sunni Muslims emigrated from Russian-controlled Azerbaijan because of Russia's series of wars with their coreligionists in the Ottoman Empire. Thus, by the late nineteenth century, the Shi'a population was in the majority in Russian Azerbaijan. Antagonism between the Sunnis and the Shi'a diminished in the late nineteenth century as Azerbaijani nationalism began to emphasize a common Turkic heritage and opposition to Iranian religious influences.

In 1806, Azerbaijan became occupied by the Russian Empire as the latter invaded Qajar Iran during the Russo-Persian War (1804–1813). In the aftermath, Iran was forced to cede therefore almost all of Azerbaijan according to the Treaty of Gulistan of 1813 to Russia. However, all this only came to be confirmed in the aftermath of the next and last war between Russia and Iran, the Russo-Persian War (1826–1828) and the resulting Treaty of Turkmenchay of 1828. In 1918, Azerbaijan declared independence from Russia and established the Azerbaijan Democratic Republic under its leading Musavat party, but was incorporated into the Soviet Union in 1920.

Before Soviet power was established, about 2,000 mosques were active in Azerbaijan. Most mosques were closed in the 1930s, then some were allowed to reopen during World War II. The Soviet rule promoted an Azerbaijani national consciousness as a substitute for identification with the world Islamic community and Iran.