The aim of the article is to analyse the relations between the discursive Islamic tradition and the national policy implemented in various forms by the Palestinians. I will use in this analysis the notion of the Islamic discursive tradition of Talal Asad, which emphasizes the importance of the relationship between power and knowledge. I will show how the Palestinian nationalist movement influenced the perception of the role and significance of religious tradition, and how it is experienced and practiced in different ways. Works by John O. Voll, Daniel M. Varisco, Dale F. Eickelman, James P. Piscatori and Armand Salvatore show how the current understanding of the relationship between Islam and politics is dependent on Western, top-down assumptions and political projects, and how these have distorted understanding of the processes taking place in the so-called Muslim world. My aim is to go beyond these erroneous assumptions and to reinterpret the Palestinian experience of shaping the relationship between religion and politics