A theocracy is a form of government that is led by God or by a person or persons who claim to rule by divine authority. The word theocracy is a compound word using theos (Greek for “God”) and -cracy (“rule, strength or government”). The nation of Israel was to have been a theocracy, but they rejected God’s rule over them, and God gave them human kings instead (1 Samuel 8:4–9). God selected Saul to be the first king of Israel, and he was replaced by David. David ruled by divine authority and, in spite of his failure and sin, was accepted by God. David was promised that God would set up his “Seed” after him and that David’s house would be established for ever (2 Samuel 7:12–16). The Seed (or Son) of David refers to the Messiah, who is the LORD Jesus Christ (Mark 10:47).
We have seen the rise and fall of several so-called theocracies throughout history. One example is the Holy Roman Empire, which comprised German-speaking peoples and Northern Italy during the Middle Ages. The Holy Roman Empire began in AD 800 with the papal crowning of Charlemagne as emperor. The rulers of the Holy Roman Empire saw themselves as overseeing a theocracy in that the power of the government was melded to that of the Roman Catholic Church.
There will not be a true theocracy upon the earth until the thousand-year reign of Jesus Christ. During the Millennium, the Son of David will rule from Jerusalem in a just and righteous way (Psalm 72:1–11; Isaiah 11; Revelation 20:4–6). At that time, “the dwelling of God is with men, and he will live with them. They will be his people, and God himself will be with them and be their God” (Revelation 21:3).
 Got Questions Ministries. (2010). Got Questions? Bible Questions Answered. Bellingham, WA: Logos Bible Software.