Abstract This article examines the impact of international conflicts involving the Muslim world upon Australia's multicultural society by studying the Howard government's responses to tensions between Islam and the West since September 11. Specifically, it surveys the Howard government's participation in the ‘War on Terror’, other aspects of Australia's foreign and security policies, including the relationship with the United States, the emergence of immigration and refugee flows as national security issues, and the subsequent impact of all this on multiculturalism and in particular on Australia's Muslim community. At a broader level, the article challenges the argument that foreign policy is inconsequential for social policy, intercommunal, inter-ethnic and inter-religious relations. The internalization of the ‘War on Terror’ has reinforced a negative portrayal of Islam and Muslims in Australia by blurring the dividing line between ‘Islam’ on the one hand and ‘extremism’ and ‘terrorism’ on the other. The...