Jirji Zaidan played a critical role in the creation of the cultural milieu of modern Arabic literature, and was influential not only because of the richness of his experience, rooted in the "Arab Renewal" of the modern era, but also because of the unique atmosphere of intellectual freedom which Egypt afforded to Arab writers during Zaidan's lifetime. In this insightful paper, the author adopts Jacques Dubois' conception of the "literary institution", and uses it throughout this paper to help explain the significance of Zaidan's work to modern Arabic literature.