History of medieval Muslim philosophy is bound up with the concept of God, the nature of the physical world and the relation between them. The concept of causation, a related issue, remained one of the most debatable and burning issues among different Muslim schools of thought. This article discusses the Theory of Causation with special reference to Mutazilites and Asharites. They both focused on the relation of God with world and the nature of the physical world. Causal relation, according to both schools of thought, is essentially a problem of the relation between God and the physical world. We argue: although both schools claim to derive their philosophy related to causation from theology, faith and reason but presented very different views of causation. Mutazilites, assert causality and the necessity of nature, attempted to prove an independent existence of the physical world with no intervention from God. Asharites, on the other hand, denied the existence of such nature as causal necessity tried to prove the continuous creation of the physical world with free intervention of God.