Azerbaijan is more populated than the other Transcaucasian states, Georgia and Armenia. Its population was an estimated 7,771,092 in 2001, giving it an average population density of 90 persons per sq km (232 per sq mi). The most densely populated area is the Abseron Peninsula in the east, where Azerbaijan’s major cities are located. Despite its larger population, Azerbaijan is the least urbanized country of Transcaucasia, as only 57 percent of its population lives in urban areas. The largest city is Baku, the capital. Other important cities include Gäncä, the industrial center of western Azerbaijan, and Sumgait, located on the Caspian coast and the second most important industrial center after Baku.

Azerbaijan has a growing and youthful population. The Turkic-speaking Azerbaijanis (Azeris), who make up more than four-fifths of the country's population, are predominantly Shi'ite Muslims. They combine in themselves the dominant Turkic strain, which flooded Azerbaijan especially during the Oguz Seljuq migrations of the 11th century, with mixtures of older inhabitants—Iranians and others—who had lived in Transcaucasia since ancient times. About 13 million Azerbaijanis live abroad, most of them in Iran. The Azerbaijani language belongs to the southwestern (Oguz or Turkmen) group of the Turkic languages. There are four main dialect divisions. The literary tradition dates to the 14th century. The Arabic script was used until the 20th century; the Cyrillic alphabet was introduced in 1939. In 1992 the Azerbaijani government switched from the Cyrillic to the Roman alphabet as its official orthography.