The establishment of the Umayyad Caliphate marks the beginning of a division in Muslim philosophy and government. The Umayyads marked Damascus as the capital of the empire, while a faction in Iraq emerged that wanted to follow its own leaders. Instead of having a Caliph, the Muslims in Iraq now followed the lead of an Imam.

Initially, all Muslims followed the direction of Muhammad. Upon his death in 662, Muslims needed to find a leader, or caliph, quickly to whom all Muslims could look for guidance. The next four Caliphs, Abu Bakr, Umar, Uthman, and Ali, were known as the "Rightly Guided" Caliphs. These were men who had worked with Muhammad and were believed to be fair and accepted leaders. Uthman, the third caliph, had delegated many of his relatives from the Umayyad family as leaders in lands throughout the empire. The Umayyad family was growing in power as the Muslim influence spread. The Umayyids had a strong voice or even ruled in many governments, and they had supported Mu'awiyya Umayyad's becoming the fourth caliph instead of Ali.

Ali had come into power at a very difficult time. He succeeded Uthman, the third caliph, who had been murdered. Uthman was a distant relative of the Umayyad family, and Mu'awiyya Umayyad had urged Ali to find the murderer. Mu'awiyya was dissatisfied with Ali's investigation, and after receiving no results, Mu'awiyya insinuated that Ali had been involved in the murder, in the hope of rising to the caliphate himself. Both men raised an army and fighting broke out. Finally, Ali called for his men to stop fighting so that terms of settlement could be discussed. Such an action disturbed the fighting Muslims, causing one of Ali's own followers to remind him that man cannot end this fight. It must be ended by God. This man soon murdered Ali as he was praying in a mosque. After Ali's death in 661, the caliphate passed to Mu'awiyya Umayyad.

Mu'awiyya came into power and made many very noticeable changes. Besides the most obvious change of moving the capital to Damascus to have a better position in Byzantine trade, he was also sure to name a clear successor to his leadership. Naturally, he wanted to keep power within the Umayyad family and named his son, Yazid, as his heir. Many strict Muslim historians do not refer to this period as a caliphate, but instead call it a monarchy since rule was established by heredity instead of appointment by peers. Mu'awiyya brought other changes including minting gold coins, restructuring ailing governments hurt by the war, establishing an impressive postal system, rebuilding broken canals, creating new irrigation systems, and erecting elaborate mosques. While many of these changes could not help but improve the daily lifestyle of the Muslim people, they also varied somewhat from the plain and simple lifestyle advocated by Muhammad. The Umayyads did not alter Muhammad's teachings, but they were now responsible for maintaining an Islamic empire growing at an astonishing rate. Not only were improvements necessary for survival, but the Islamic Empire needed to present itself to the rest of the world as a formidable power.

The Umayyad rulers are credited with the growth of the Islamic empire politically, militarily, and artistically; but they also brought about many new stages in cruelty and degradation. While Muhammad and his immediate successors lived as the common people did, the Umayyad leaders came to live as kings with extreme wealth and adornments. This new status of caliph differed from the expectations of Muhammad, but it seemed to fall in line with expectations in the newly conquered lands as the Islamic empire grew.

Gradually, many factions of the empire became unhappy with Umayyad rule. Newly converted Muslims brought into the empire were dissatisfied with their status of inferiority to natural-born Muslims. Other Arabs were denied pensions and were not content with the Umayyad rule. Non-Muslims were forced to pay exorbitant taxes and could not continue to support the Umayyad empire.

Following the death of Mu'awiyya, civil war broke out in the empire between Umayyad supporters and the followers of Ali. Mu'awiyya's son Yazid was now in power and wanted to make his position known by killing the son of Ali, Husayn, who had also succeeded his father. Mu'awiyya soon died and after a short term in office, his son died also. Now the leadership was in question, and Arabs scattered all over the growing empire were attempting to claim it. Amidst bloody battles and conquests, the Umayyads managed to emerge on top and maintained their position in the caliphate.

Yet the Umayyads could not withstand another civil war. As their empire grew, so did their opposition. In 750, the Umayyad caliphate finally came to a close and the Abbasids came into power.