Armend Nimani / AFP / Getty Kosovo dervishes, adepts of Sufism  a mystical form of Islam that preaches tolerance and a search for understanding  meet in a prayer room in the city of Prizren

In recent years, the dominant image of islam in the minds of many Westerners has been one loaded with violence and shrouded with fear. The figures commanding global attention  be they al-Qaeda's leadership or certain mullahs in Tehran  preach an apocalyptic creed to an uncompromising faithful. This may be the Islam of a radical fringe, but in an era of flag-burnings and suicide bombings, it is the Islam of the moment.

And that is why some lament the decline of another, older and more tolerant Islam. For centuries many of the world's Muslims were, in one way or another, practi-tioners of Sufism, a spiritualism that centers on the mystical connection between the individual and the divine. Sufism's ethos was egalitarian, charitable and friendly, often propagated by wandering seers and storytellers. It blended with local cultures and cemented Islam's place from North Africa to the Indian subcontinent. (Read "An Islam of Many Paths.")

Yet amid the hurly-burly of 19th century empires, Sufism lost ground. The fall of Islam's traditional powers  imperial dynasties such as the Mughals and the Ottomans  created a hunger for a more muscular religious identity than that found in the intoxicating whirl of a dervish or the quiet wisdom of a sage. Nationalism and fundamentalism subdued Sufism's eclectic spirit. In the West, Sufism now usually provokes paeans to an alternative, ascetic life, backed up perhaps by a few verses from Rumi, a medieval Sufi poet much cherished by New Age spiritualists. But there was nothing fringe or alternative about it. "In many places, Sufism was the way whole populations expressed their Muslim identity," says Faisal Devji, an expert on political Islam at Oxford University. "In South Asia, it was the norm."

Some analysts think that historical legacy can still be exploited. A 2007 report by the Rand Corp., a U.S. think tank, advised Western governments to "harness" Sufism, saying its adherents were "natural allies of the West." Along similar lines, the Algerian government announced in July that it would promote the nation's Sufi heritage on radio and television in a bid to check the powerful influence of Salafism, a more extreme strain of Islam that is followed by al-Qaeda-backed militants waging a war against the country's autocratic state.

But can Sufism really bend terrorist swords into plowshares? The question is most urgent in South Asia, home to more than a third of the world's Muslims and the cradle of Sufi Islam. Shrines of Sufi saints are ubiquitous in India and Pakistan and still attract thousands of devotees. Yet the Taliban in Pakistan have set about destroying such sites, which are anathema to their literalist interpretation of the Koran. "Despite our ancient religious tradition," says Ayeda Naqvi, a writer and Sufi scholar from Lahore, "we are being bullied and intimidated by a new form of religion that is barely one generation old." (See pictures of the Taliban on LIFE.com.)

Still, Naqvi, Devji and other academics doubt that governments can use Sufism to fight their political battles. As in the past, foreign meddling would likely do more harm than good. "What is needed today, more than the West pushing any one form of religion," says Naqvi, "is a propagation of the underlying values of Sufism  love, harmony and beauty." This is not easy, especially in Pakistan, where poverty, corruption and the daily toll of the global war on terrorism simmer together in a volatile brew. Set against this, the transcendental faith of Sufi mystics seems quaint, if not entirely impotent.

But there is more to the allure of Sufism than its saints and sheiks. In 2001, one of the first things to happen after the Taliban was chased out of Kabul was that the doors of the Afghan capital's Bollywood cinemas were flung open to the public. The language of cosmic love that animates Bollywood music and enchants millions of Muslims around the world, even if sung and acted out by non-Muslims, is a direct legacy of centuries of Sufi devotional poetry. At Sufism's core, suggests Oxford University's Devji, is an embrace of the world. "It allows you to identify beyond your mosque and village to something that can be both Islamic and secular," he says. "It's a liberation that jihadis could never offer."

Nevertheless, it has also been Sufism's fate to fall afoul of more narrow-minded dogmas  even during an earlier golden age. The tomb of Sarmad the Armenian, a storied Sufi saint, sits close to Delhi's Great Mosque. Sarmad looked for unity within Muslim and Hindu theology, and famously walked the streets of Lahore and Delhi naked, denouncing corrupt nobles and clerics. In 1661, he was arrested for heresy and beheaded under the orders of the Mughal Emperor Aurangzeb, a ruler admired now by Pakistani hard-liners for his championing of an orthodox Islam and the destruction of hundreds of Hindu temples. As Sarmad was led to his execution, he was heard to mutter lines of poetry: "There was an uproar, and we opened our eyes from eternal sleep," intoned the Sufi. "Saw that the night of wickedness endured, so we slept again." For many, Sufism's slumber has lasted far too long.

Read TIME's 2004 story "Struggle for the Soul of Islam."