As a case-study, this thesis investigates the political challenge posed by Darul Arqam, an Islamic movement, to the Malaysian state from 1968 until 1996. As a general manifestation of Islamic resurgence, the challenge sheds light on three important issues: the tactics, methods and strategies pursued by Islamic movements; the secular authorities' pattern of response to Islamic movements; the impact of repression on Islamists. The Darul Arqam challenge was unique in dispensing with conventional Islaniist ideas and practices, in generating an atypical reaction from the state and in producing an unconventional counter-response to state-initiated suppression. Darul Arqam's roots are traced to Malaysian Islam's largely sufi inclinations, which have been neglected by most contemporary Islamists for their perceived disadvantages, but which Darul Arqam successfully harnessed to its benefit. Given Darn! Arqam's disavowal of political violence and the state's strategy of emphasising cooptation and accommodation of Islaniists, its full-blown repression of Darul Arqam in 1994 deserves scrutiny in its myriad aspects and implications. The paradox of Darul Arqam's challenge is underlined by its innate capacity to weather external pressure, showing that wholesale repression would not necessarily amount to liquidation of a grassroots movement. - Applying the case-study of Darn! Arqam to wider historical and situational seftings, this thesis urges a rethinking of issues and concepts of general theoretical and practical significance. Malaysia and Darni Arqam are contextually situated within the Islamic periphery: a subject area which has eluded the serious attention of scholars intent on unearthing the phenomenon of Islamic resurgence. Yet, unconventional cases in the periphery, often guided by a pragmatic appreciation of indigenous mores, may be a more appropriate yardstick to gauge the potential of political Islam on account of its inherent grassroots appeal. Within the context of political Islam in Malaysia, this study examines the relative impact of long-term internal structural processes and global developments in moulding the contemporary scenario. Ideologically, the empirical case-study of Darul Arqam as a dynamic movement, combining the theory of sufi-messianic Islam with an achievement-oriented economic ethic, challenges conventional theories which postulate an incompatibility between religion, especially in its otherworldly dimensions, and modernisation, as measured mainly in terms of material development. Darn! Arqam, despite its heavily spiritual inclinations, emerged in the 1990s as an independent economic powerhouse which threatened the status quo of Malaysian politics. It is the successful marriage between apparently contradictory modes of social organisation, arguably unprecedented among contemporary political Islaniists, which underlines Darn! Arqam's distinctiveness and merits as a case-study with global implications.