This comparative study examines the co-evolution of three pivotal dimensions of party systems that shape democratic political landscapes in distinct but interconnected ways: institutionalization, nationalization, and polarization. While much of the existing literature examines these dimensions in isolation or narrowly focuses on specific cases or regions, we integrate novel data to present an overarching overview of party systems across a global sample of post-WWII democracies. By employing Latent Class Growth Analysis, we identify common trajectories of party system developments over time. Additionally, we investigate the democratic consequences of these party system trajectories by exploring what types of party systems are most conducive to various aspects of democratic performance. Our findings offer important insights into the role of political parties—long considered to be the bulwarks of democracy—in shaping the fortunes and resilience of contemporary democracies across diverse political contexts.