Having remained wedded to Kashmir as an “armed self-determination conflict” for over five decades, Pakistan under General Pervez Musharraf seems to be changing course in favor of a diplomatic settlement that would be acceptable to India, Pakistan and the Kashmiris. This changing Pakistani outlook on Kashmir is clearly reflected in President Musharraf’s advocacy of a four point proposal which seeks a settlement of the Kashmir dispute outside the framework of UN resolutions. This article describes key elements of Islamabad’s new thinking on Kashmir, analyses some of the domestic, regional and global factors underpinning this change and concludes by noting some of the domestic challenges faced by Musharraf in effectively pursuing his out of the box thinking on Kashmir.