Some of the most difficult issues facing established and new democracies concern the management of an ethnic conflict. Ethnic identities provide an affective sense of belonging and are socially defined in terms of their meaning for the actors, representing ties of blood, soil, faith, and community. Agencies concerned with the peaceful amelioration of such antagonisms have increasingly turned towards 'constitutional engineering' or 'institutional design' to achieve these ends. The aim has been to develop rules of the game structuring political competition so that actors have in-built incentives to accommodate the interests of different cultural groups, leading to conflict management, ethnic cooperation, and long-term political stability. This article draws attention to one of the most influential accounts in the literature that has been provided by the theory of 'consociational' democracy developed by Arend Lijphart, which suggests, that nations can maintain stable governments despite being deeply divided into distinct ethnic, linguistic, religious, or cultural communities. The article reviews and analyzes the approach taken by Lijphart and other researchers of consociational idea. After reviewing the major definitional aspects of consociationalism the article traces the practical development of the model over time and the breakdowns of the consociational concept in confrontation with the political reality.