The third wave of democratization became the occasion for sharpening the engagement between ethnic identity and democracy, as democratization spread to countries that were much more fragmented along cultural lines than was true of early democratizers. Three sets of issues in particular were brought onto the agenda: whether ethnic diversity in and of itself represents a powerful obstacle to building stable democracies; whether strong ethnic identities are detrimental to the democratization process; and the causal paths by which ethnic identities are implicated in democratization and de-democratization processes. This essay examines these questions in light of the post-Soviet region, making three arguments. First, ethnic diversity is a relatively weak explanation of democratic development on its own, but ethnicity rather exercises its effects on democratization through its interaction with other factors that affect democratic development. Second, the impact of ethnicity on democratization flows through processes of ethnic mobilization, which are not a function of diversity per se, but rather revolve around how democratization affects the interests of minorities and the capacities of challenging groups. And third, ethnic nationalism is not necessarily incompatible with democracy, but rather depends on the types of objects against which ethnic groups mobilize, so that strong ethnic passions can form the basis for a mobilized path to democracy when ethnic nationalism is focused against foreign domination rather than against other ethnic groups.