This paper begins with the examination of the concept of globalization and modernization before exploring the concept of Ummah and globalization's impact on Muslim understanding of Ummah. This paper investigates theological meaning of Ummah by using Quranic research methodology and examines Muslim understanding of Ummah in the globalized world. It finds that even though the theological meaning of Ummah stands for the whole of humankind it becomes an exclusive concept in the era of globalization and it creates confusion.