This article discusses federalism and deferent theories related to it. Federalism as a theory, as a concept and as an organizational structure refers to the distribution of powers between the two levels of the government. It stands for unity, cooperation, and interdependence between the central government and the component units. Being dynamic in nature, it adopts changes according to the prevailing conditions of the country. An attempt has been made to elucidate federalism from two broad perspectives of the classical approach and Modern approach. The classical approach restricts federalism to cooperation and independence with quasi federalism, coupled with the element of encroachment from the federal government. This approach is merely based upon the doctrine of legal formalism or formalism fallacy. The modern approach focuses on two cardinal principles of cooperation and interdependence. The modern theory is a broad term and encompasses many forms of federalism within its ambit.