Current democratic theory and recent international policy initiatives reveal an intense interest in the relationship between social capital and democracy. This interest is the most recent variant of a long theoretical tradition positing that a vigorous associational life is beneficial for the creation and maintenance of democracy. Despite the popularity of this view, little quantitative empirical evidence exists to support the relationship. Here, the relationship between social capital and democracy is tested using data from a large, quantitative, cross-national study. Two additional tests are introduced. First, the plausible reciprocal effect-from democracy to social capital-is included in models. Second, the potentially negative impact of some associations on democracy is considered. Using data from the World Values Survey and the Union of International Associations in a cross-lagged panel design, results show that social capital affects democracy and that democracy affects social capital. Additional tests demonstrate that associations that are connected to the larger community have a positive effect on democracy, while isolated associations have a negative effect. Theory relating social capital to democracy is drawn from the literature on civil society, political culture, and social movements.