British foreign policy in the Middle East has been well researched. However, there are still aspects of Britain’s approach towards the Middle East and North Africa (MENA) that have yet to be researched. One such aspect is Britain’s encounter with the rise of political Islam in MENA and the way(s) in which this phenomenon was deciphered. Even though political Islam dates back to the late 19th and early 20th century, our study focuses on the period between the turbulent years of the outburst of the Iranian Revolution in 1978–1979 and its widely-felt influence until 1990. Our methodological tools include Foreign and Commonwealth Office (FCO) archival material that addresses the phenomenon of political Islam and its implications for British interests and international relations in general. We choose the concept of political Islam and its adherents that are widely acknowledged as political, comparatively to those of da’wa and Jihadi Islamism. We argue that British officials were widely influenced by the intellectual debates of the period under consideration and that they mainly adopted four analytical schemas which focused firstly on the rise of sectarian politics in MENA, secondly on the gradual accommodation of non-state actors and organizations in political analysis, thirdly on the worrisome prospect of an alliance between Islamist and communist forces, and lastly on the prevalence of the idea of Islamic solidarity and Islamic exceptionalism in exerting international politics. Our findings suggest that, at times, the FCO approaches the issue of political Islam with a reassuring mindset, focusing on its divisions and weaknesses, while at other times it analyzes it with a grave concern over stability and Britain’s critical interests.