The two-nation theory was an ideology of religious nationalism that advocated Muslim Indian nationhood, with a separate homeland for Indian Muslims within a decolonised British India, which ultimately led to the partition of India in 1947. Its various descriptions of religious differences were the main factor in Muslim separatist thought in the Indian subcontinent, asserting that Indian Muslims and Indian Hindus are two separate nations, each with their own customs, traditions, art, architecture, literature, interests, and ways of life.

The theory was adopted and promoted by the All-India Muslim League and Muhammad Ali Jinnah and became the basis of the Pakistan Movement. Hindu Mahasabha under the leadership of Vinayak Damodar Savarkar and Rashtriya Swayamsevak Sangh (RSS) supported the Two-nation theory. According to them, Hindus and Muslim cannot live together so they favoured India to become a religious Hindu state. The Two-Nation theory argued for a different state for the Muslims of the British Indian Empire as Muslims would not be able to succeed politically in a Hindu-majority India; this interpretation nevertheless promised a democratic state where Muslims and non-Muslims would be treated equally. The two nation theory sought to establish a separate state for Indian Muslims from the northwestern provinces and Bengal region of colonial India. Pakistan claims to be the inheritor of the traditions of Muslim India, and the heir of the two-nation theory. Buddhist and Dalit activist, B R Ambedkar supported the theory and partition of India in the interest of safety of India. According to Ambedkar, the assumption that Hindus and Muslims could live under one state if they were distinct nations was but "an empty sermon, a mad project, to which no sane man would agree". Congress rejected two-nation theory and opposed it even after the creation of Pakistan.

Apart from Congress, the opposition to the two-nation theory also came from a number of Hindus, and Muslims. They conceived India as a single Indian nation, of which Hindus and Muslims are two intertwined communities. The Republic of India officially rejected the two-nation theory and chose to be a secular state, enshrining the concepts of religious pluralism and composite nationalism in its constitution. Kashmir, a Muslim-majority region three-fifths of which is administered by the Republic of India, and the oldest dispute before the United Nations, is a venue for both competing ideologies of South Asian nationhood.

Pakistani historians such as Ishtiaq Hussain Qureshi base the two-nation theory on the distinctiveness of medieval Indo-Muslim culture or civilization. It is described that by assimilating many aspects of Indian culture in customs, social manners, architecture, painting and music, the Muslims of India established a new distinct Indo-Muslim culture or civilization, which not only maintained its separate identity from other Muslim peoples such as the Arabs and the Persians, etc., but also simultaneously maintained the distinctiveness of this new culture from the former Hindu India by being essentially Indo-Persian in character. This is seen as a conscious decision of the Muslims of India. According to Qureshi, the distinctiveness of Muslim India could only be maintained by the political domination of the Muslims over the Hindus. Any sharing of political power with the Hindus was considered dangerous and the first step towards the political abdication of the Indian Muslims.

It is generally believed in Pakistan that the movement for Muslim self-awakening and identity was started by Ahmad Sirhindi (1564–1624), who fought against emperor Akbar's religious syncretist Din-i Ilahi movement and is thus considered "for contemporary official Pakistani historians" to be the founder of the Two-nation theory, and was particularly intensified under the Muslim reformer Shah Waliullah (1703–1762) who, because he wanted to give back to Muslims their self-consciousness during the decline of the Mughal empire and the rise of the non-Muslim powers like the Marathas, Jats and Sikhs, launched a mass-movement of the religious education which made "them conscious of their distinct nationhood which in turn culminated in the form of Two Nation Theory and ultimately the creation of Pakistan."

M. S. Jain and others have traced the origins of the two nation-theory to Syed Ahmed Khan and the Aligarh Movement, consisting of his followers such as Mohsin-ul-Mulk. Syed Ahmed Khan was the grandson of the Mughal Vizier of Akbar Shah II, Dabir-ud-Daula, while Mohsin-ul-Mulk belonged to a family that played an important part in shaping the fortunes of the Mughal Empire, known as the Sadaat-e-Bara, who had been de-facto sovereigns of the Mughal Empire in the 1710s.

This feudal Indian Muslim service gentry, which performed both clerical and military service for the Mughal Empire and the British, provided cultural and literary patronage, which acted even after the fall of Muslim political power, as preservers of Indo-Persian traditions and values. They consisted of a group of feudal elites with an interest in preserving their power and position in relation to Hindus and the British. The resistance of Hindus towards the Urdu language prompted Syed Ahmed Khan and his associates to view Indian Muslims as not only having their own separate culture, but belonging to a separate nation, using the Urdu word, "Qawm". Syed Ahmed Khan provided a modern idiom in which to express the quest for Islamic identity, His concept of Indian Muslim identity placed great importance on nativity and the cultural values of Muslim India, and his writings became a dissemination of ideas about a national identity that was both Muslim and Indian.

Thus, many Pakistanis often quote modernist and reformist scholar Syed Ahmad Khan (1817–1898) as the architect of the two-nation theory. For instance, in 1876, Syed Ahmed Khan exclaimed when speaking at Benares: