By the foundation of the Caliphate institution particularly in the Abbasid period, Iranians, in order to restore their political power and identity, founded the monarchy institution. They also started competing and even enmity towards the Abbasid. In the Khwarazmshahid period the caliphs and sultans were both seeking to expand their power and territory using different methods among which religious policies were of importance. The Persian Iraq, the most important site of dispute for both institutions, was, thus, turned into the battlefield for both the Abbasid and the Khwarazmshahid and their political allies. It was perhaps the absence of a ubiquitous central power, itself the direct result of the decay of the Seljuk Empire, that had doubled the greed of both institutions for the inheritance of power. While the Abbasid were seeking to restore their political power, the Khwarazmshahid were trying to dominate Baghdad and to get the Abbasid to acknowledge the political and martial dominance of the Sultans all of which led to the competition between these two powers to attract allies among local governments of Iran, aroused several conflicts in Persian Iraq, and at last ended in the defeat of the Khwarazmshahid. The present article aims at evaluating the role of religion in the relations and conflicts between the Abbasid and Khwarazmshahid from the beginning up to the reign of Sultan Mohammad. In order for this to happen valid historical resources and research findings are exploited and a descriptive –analytic method is applied.