What populism and polarization have in common is that their relationship with democracy is an ambiguous one. Studies have found that certain degrees of polarization can be helpful for citizens to make up their minds about their choices and because of that encourage them to democratic participation. Similarly, populism can help increase participation by, for example, presenting policies in a simpler language. Citizens with less political interest and political knowledge might be incited to participate in elections and democratic politics in general. However, high levels of polarization lead to the irreconcilability of factions and thereby to gridlock. Democracy can be regarded as incapable of solving citizens’ problems. Likewise, populism can be destructive to democracy when occurring in certain forms and degrees. While populism is not per se antidemocratic, populist parties and leaders, when in power, repeatedly challenge democratic elements. To disentangle how polarization and populism affect democracy, I focus on certain specifics of these three concepts (democracy, populism, and polarization). Namely, I analyze how affective polarization and individual-level populism affect the support for the direct democratic instrument of holding referendums. Drawing on survey data from Austria and Germany, I find that being affectively polarized has a positive effect on the support for holding referendums. However, this effect is moderated by citizens’ individual-level populism. Thus, this study provides insights into citizens’ preferences for democratic decision-making, dependent on their levels of affective polarization and populism.