This thesis is a twofold attempt at understanding the reception of Salman Rushdie’s novel The Satanic Verses (1988) from a secular and a religious perspective. The Rushdie case has stirred powerful emotions on a global level and raised important questions about Muslim diasporas and the relationship to the societies around them. The thesis argues that The Satanic Verses was meant to be a program for liberation since the novel raises highly important questions of existential nature, related to the dilemma of the world’s migrant in particular: Firstly, how do we deal with the issue of assimilation versus isolation? Do we create cultural and religious identity through the formation of powerful myths that have little or no correspondence to reality? The thesis shows that Rushdie, through his fictional characters, exposes how bigotry and fundamentalism, conducted by totalitarian regimes as well as liberal democracies, wreck havoc among mixed-up human beings, and as a corollary, distort their identity. Moreover, it reveals how Rushdie deconstructs myths in order to lay bare their falsity. Secondly, the thesis addresses the issue of art, ethics and morality, noticing it to severely conflict with the views of minority groups inhabiting a universe outside the mainstream culture. It addresses Islam’s impact on contemporary literature and on the formation of cultural identity. It argues that these issues have predominantly been discussed within the frameworks of liberal democracy. The thesis shows that Rushdie, using art as a ‘third principle’ of mediating between the material and spiritual worlds, indirectly discusses the role of literature in The Satanic Verses, as one of promoting newness and of being a counter discourse, one of resistance to what Rushdie sees as flawed dominant discourses in society. Despite the justification, however, the thesis, by providing an analysis of the textual reasons for offence, concludes that Rushdie to some extent overstepped the boundaries of artistic freedom. By using a vocabulary similar to the vocabulary of Orientalism, in a piece of fiction closely resembling what Muslims at large consider to be historical reality, Rushdie was seen to enter the sacral space of millions of Muslims. Rushdie’s philosophical probing sadly conflicts with the Muslim formation of cultural and religious identity and with the concept of honour. The thesis concludes that freedom of expression is not the same as freedom to offend. Before we discuss issues of freedom, censorship, morality and law, we must acknowledge the fact that the philosophy of Enlightenment and the concept of liberal democracy are concepts unfamiliar to a large part of the world.