Lezgins are one of the peoples on the territory of the Former Soviet Union, living in the Russian Federation and the Republic of Azerbaijan, who have been particularly affected by the dissolution of the USSR and the emergence of the newly independent states. The ways they are being integrated into the new political order of the Republic of Azerbaijan pose challenges and implications for the overall state policies related to the treatment of minorities. Thus, this paper deals with the aspects of state-building regarding minorities and the factors affecting policy-making towards the Lezgin community. It mainly focuses on the situation of the Lezgins in the Republic of Azerbaijan, but also provides references to the position of the Lezgins in Dagestan (Russian Federation) where necessary. The paper assesses the policy environment related to minority issues and outlines the policy options in a multiethnic state, namely modernisation, pluralism and centralism, and argues that the policy dilemma is that in trying to avoid divisive tendencies in the state, each approach may encourage ethnic tensions and conflict. What is required, therefore, is a flexible approach which neither over- nor underestimates ethnic distinctions.