This paper explores Shi‘i-British relations during the early stages of British colonization in Iraq. I argue that Shi‘i resistance to British rule in Iraq profoundly altered the development of the modern Iraqi nation and sowed seeds of Sunni-Shi‘i sectarianism. Attempting to fill the power vacuum that had recently been created by the fall of the Ottoman Empire, Shi‘i religious officials (mujtahids) rejected British rule. When British forces arrived in Iraq at the beginning of World War I, Shi‘is launched an armed resistance (jihad) against foreign invasion. Shi‘i mujtahids also coordinated two additional anti-British revolts in the early 1920s. Historians have generally concluded that Shi‘i resistance to the British failed. However, few scholars have considered the impact of Shi‘i resistance on the social and political development of Iraq. My paper suggests that the antagonistic stance of Shi‘i officials pushed Britain to establish patron-client relations with non-Shi‘i sources of power, such as tribal shaykhs and Sunni notables. In an attempt to increase the non-Shi‘i population of the country, Britain also successfully fought to incorporate Sunni Kurdish territory into Iraq. Further, the political center of Iraq developed measures to exclude Shi‘i mujtahids from politics. My research is based on British government records and the writings of Shi‘i mujtahids as well as correspondence between British and Shi‘i officials. On the basis of these records this paper analyzes more closely the question of why Shi‘i resistance to Britain did not evolve into Iraqi nationalism more easily. Was Sunni-Shi‘i sectarianism simply an insurmountable obstacle for Iraqi unification? To what extent is Britain’s divide and rule policy to blame for the slow development of Iraqi nationalism? Additionally, were Shi‘i officials excluded from Iraqi politics precisely because they emerged as the most powerful critics of Britain? These are among the questions that this paper will address in an attempt to add more nuance to the role that Shi‘i officials played in the creation of modern Iraq. Far from dismissing the Shi‘i resistance to Britain as a failure, this paper underscores Shi‘i involvement and exclusion in the development of twentieth-century Iraq as integral to its evolution.