This article compares the rise of anti-Muslim racism in Britain and Australia, from 1989 to 2001, as a foundation for assessing the extent to which the upsurge of Islamophobia after 11 September was a development of existing patterns of racism in these two countries. The respective histories of immigration and settlement by Muslim populations are outlined, along with the relevant immigration and ‘ethnic affairs’ policies and the resulting demographics. The article traces the ideologies of xenophobia that developed in Britain and Australia over this period. It records a transition from anti-Asian and anti-Arab racism to anti-Muslim racism, reflected in and responding to changes in the identities and cultural politics of the minority communities. It outlines instances of the racial and ethnic targeting by the state of the ethnic and religious minorities concerned, and postulates a causal relationship between this and the shifting patterns of acts of racial hatred, vilification and discrimination.