AbstractHow do ethnically divided countries create inclusive and stable democratic institutions? Why do some kinds of federalism fail while others evolve? Scholars looking for answers to these kinds of questions have tended to focus on the West. Yet there are important lessons arising from the substantial democratic and federal reforms that have taken place in Asia over the last few decades. These reforms signal a new model of federal democracy in Asia, comprising multilevel ethnoterritorial federalism, mixed-majoritarianism and a party system that includes both ethnic and multi-ethnic parties. This model has emerged as a response to ethnic conflict and secession risks and reflects the high diversity of clustered communities and cross-cutting cleavages. Despite its overarching majoritarianism, the federal model has led to highly fragmented party systems and coalition governments, with positive implications for democratic stability. Together, these features go some way towards blending otherwise conflicting consociational and centripetal paradigms.