When the Fatimids migrated from North Africa to Egypt, they inherited a subject population of considerable diversity, which included established Christian communities, such as Melkites and Copts, substantial numbers of Jews, as well as Sunnis and Ithna Ashari Shia. Many of these groups had distinct and contentious ethnic identities. The challenge of governing these ethnically and religiously diverse communities was amplified by the fact that the Fatimids reigned as Shi'i Imam-Caliphs, thus asserting their authority as legitimate heirs of the Prophet to the spiritual and temporal leadership of their empire. This paper will focus on the initial phase of the Fatimid rule in Egypt. It will examine the reign of al-'Aziz billah, an era noted for great tolerance and inclusiveness. Not entirely without difficulties and occasional conflict, the decades of this caliph were nonetheless regarded as an exemplary period for the active participation of a wide range of groups, Christians and Jews among them, in his government. This paper will review the model of inclusive governance that al-'Aziz negotiated during his reign and discuss the challenges he faced in managing expectations of the diverse communities within his empire.