This paper deals with ethnicity and ethnic identity in Malaysia and southern Thailand at the intra-Malay level. It was once supposed that ethnicity became a more important aspect of people`s identity with culture contact. Ethnicity was associated with tradition and conservatism in the organization of social relations, and urbanization with modernity and change. Continued research of the matter has indicated otherwise, however. In the ethnically diverse and competitive environment of the modern cultural situation, ethnic awareness tends to be heightened, and ethnicity is likely to become not less but more relevant as a basis for people`s relating to one another. This paper examines the historical, early ethnographic, and contemporary political analyses of the dynamics of the Malay-Muslims identities of Malaysia, especially Kelantan(the northeastern area of Malay peninsula) state, and Thailand, especially Patani region where located in the southern area of Thailand. The historical and ethnographic overview descries the Islamic influence on the traditional kingdom of Patani and Kelantanese Malays, the consequences of British colonialism, and the results of the reign of Thailand kingdom. The contemporary plolitical analysis is deprived from scholarly attempts at assessing the recent situation of Malay-Muslims as they faced the internal colonialism of the Thailand government and experience ethnic repression in malaysia and Thailand. The central concern in this paper is that under what conditions is ethnic identity activated and used as the basis for political mobilization more actively and effectively. In other words, what accounts for variation in the level of ethnic nationalism between the two Malay-Muslims communities? In this paper, it is hypothesized that certain aspects of ethnic policy produce the conditions under which ethnicity becomes most effectively utilized by the group as the basis for political mobilization. Consequently, this paper proposes to examine the relationship between the religious and ethnic policy and political mobilization, and degree of involvement in religious or ethnic activities of the Malay-Muslims communities in Malaysia and southern Thailand. The dynamics of ethnicity in Malaysia and Thailand show that the Malay-Muslims`ideas and attitudes of their own traditions have strict oppositions or a lot of differentiations in terms of the differences of religious understandings of Islamic principles and values, which have been influenced by the implementation of Islamization policy. In conclusion, this paper has illustrated the fluidity of malay-Muslims identities in Malaysia and Thailand, and has stressed that these identities are continually constructed and reconstructed on the basis of situationally defined political and social interests. They are not just primordial, nor are they purely voluntary constructions. They interact with outside forces, definitions as well and are important resources for political organizing. A remaining issue is whether these identities facilitate connections or set up barriers.