Objective Few studies have systematically examined the international organization (IO)‐democracy nexus, except Pevehouse (2002, 2005), who found the democratizing impact of regional IOs. Our study extends previous research by investigating the indirect as well as the direct effects of IOs on democracy. Methods We employ a two‐equation model, using the data for 112 developing countries for 1972–2002. Results Regional IOs increase the level of economic openness, which in turn leads to improvements in democracy. Conclusions IOs indeed facilitate democratic development in their member states both directly and indirectly by enhancing these countries’ international trade.