This article makes the case for a novel democratic subtype, populist democracy, indicating a situation in which both the party in office and at least the major opposition force(s) in a pluralist system are populist. Based on a minimal definition of populism as ‘democratic illiberalism’, and through the comparative analysis of post-authoritarian Greece and post-communist Hungary, the article reveals the particular stages, as well as the causal mechanisms, that may prompt the emergence of populist democracy in contemporary politics. It also points to the tendency of such systems to produce polarized two-party systems, and it calls for further research on the topic.