The establishment of Nezamiyeh Schools in the eleventh century (AD) and its expansion with emphasis on the teachings of the Shafi’I Islamic sect and Ash’ari theology, also its stress on the executive staff, has distinguished these schools during the middle age in Iran. The goals of the establishment of Baghdad were influencing political and religious affairs, gaining legitimacy for the Saljuks and restricting the activities of dissidents such as Hanbalis who made up the majority of the population of Baghdad. But at the beginning religious strife fuelled. In addition, the position of militia with the action of political activities such as Saljuk sultans and military princes by establishing schools to highlight the Hanifi sect and expel the Shafi’is or Ash’arites. On the other hand, the Caliph’s action in attracting or expelling teachers brought about creating financial problems for the opposition and supporting school buildings. The Hanbalis faced a serious challenge, and its decline reached the point that some teachers inevitably moved west to the Sauk territory. This study by using descriptive-analytical approach investigates the formation process and political and economic factors which affected the decline of the Baghdad schools.