In contrast to common perspectives that political modernisation equates to secularisation and a separation of religion from politics, this study attempts to show how the firm integration of religious and traditional social principles have been essential elements in the modernisation of the Sultanate of Oman's politics and political system since 1970. This incorporation of tradition with modernity helps explain Oman's unique internal stability and consistently neutral standing within a turbulent Middle East region. This research applies a qualitative and political-historical approach to address the hypothesis. In Oman, "Good Neighbourliness" principles and traditional social methods were developed and adapted to shape the politics of the modern state. The key values that can be discerned in the Omani political formula are toleration, pragmatism and neutrality in relation to good neighbourliness, which seems to have promoted harmonious relations within Oman, and across its regional environment stretching back to Oman's long interaction with the Islamic world, the Indian Ocean and East Africa. Since the eighth century, the date of embracing the Ibadism school of Islamic thought, patterns of ethics in Oman have become entrenched and a set of common morals were passed from generations to generations. Over the years, traditional good neighbourliness principles that have come into existence include: not intervening in others domestic affairs, a duty to refrain from any inconsistent behaviour in international relations, not making threats against the territorial integrity or political independence of any state. Furthermore, it includes a duty to settle international disputes by peaceful means in such a manner that international peace, security and justice are not endangered, a duty to respect the principle of equal rights and selfdetermination of people, and the duty to respect the principle of sovereign equality of states. Through a broad political-historical analysis, this research shows that these main principles can be traced to the nature of Oman's society and religion, and consequently underpin the politics and foreign policy of the Sultanate of Oman. A unique management and application of foreign policy has been generated to organize, maintain, and pursue traditional "Good Neighbourliness" with all countries around the world. This is, however, not a new innovation but perhaps a revival or renaissance of previous traditions. This research examines the impact of Oman's society and religion on its politics and evaluates the implementing of the concept of traditional good neighbourliness as a basis of Oman's social structure, religious principles and political system in terms of administration and leadership.