This article provides a holistic analysis of the modern Azerbaijani economy,tracing its trajectory from a post-Soviet planned economy to a hydrocarbon-dominated model and its ongoing struggle to achieve sustainable diversification. The analysis begins by contextualizing the Soviet legacy and the profound economic shock of the early independence period. It then details the transformative impact of the oil and gas boom, which fueled a decade of unprecedented GDP growth, infrastructure modernization, and poverty reduction. The article critically examines the macroeconomic structure, highlighting the persistent duality between a robust hydrocarbon sector and a less competitive non-oil sector. A central focus is placed on the institutional mechanisms for managing resource wealth, particularly the role of the State Oil Fund (SOFAZ), and their impact on fiscal policy and economic stability. The study further investigates the persistent challenges of the “resource curse,” including vulnerability to commodity price shocks, weak non-oil exports, and the need for a more conducive business environment. Finally, the article assesses the national diversification strategies, the potential of key non-oil sectors, and the emerging role of renewable energy and digitalization as future growth drivers. The conclusion emphasizes that Azerbaijan's future economic resilience hinges on its ability to accelerate structural reforms and translate resource wealth into sustainable human capital and a diversified, competitive private sector.