Answer
Ancient Babylon was located in modern-day Iraq. Ancient Babylon rose to dominance after throwing off the bonds of the Assyrians. The short period of Babylonian dominance that has biblical significance is referred to as the Neo-Babylonian Empire, as Babylon had been a dominant force at an earlier time.
Babylon and King Nebuchadnezzar figure prominently in the Old Testament, as it was Babylon that invaded Judah, destroyed Jerusalem and the temple, and carried off many Jews to Babylon as exiles. These events are recorded in 2 Kings 17—25 and 2 Chronicles 32—36. Several of the prophets revealed that Jerusalem would fall to the Babylonians as God’s judgment on Judah for her sin. Notably, Jeremiah counseled surrender to the Babylonians in acceptance of God’s will: “This is what the Lord, the God of Israel, says: I am about to turn against you the weapons of war that are in your hands, which you are using to fight the king of Babylon and the Babylonians who are outside the wall besieging you. And I will gather them inside this city. I myself will fight against you with an outstretched hand and a mighty arm in furious anger and in great wrath. I will strike down those who live in [Jerusalem]—both man and beast—and they will die of a terrible plague. After that, declares the Lord, I will give Zedekiah king of Judah, his officials and the people in this city who survive the plague, sword and famine, into the hands of Nebuchadnezzar king of Babylon and to their enemies who want to kill them. He will put them to the sword; he will show them no mercy or pity or compassion. . . . This is what the Lord says: See, I am setting before you the way of life and the way of death. Whoever stays in this city will die by the sword, famine or plague. But whoever goes out and surrenders to the Babylonians who are besieging you will live; they will escape with their lives. I have determined to do this city harm and not good, declares the Lord. It will be given into the hands of the king of Babylon, and he will destroy it with fire” (Jeremiah 21:4–10).
Daniel was a young man who was taken to Babylon as an exile. He rose to prominence in the administration of King Nebuchadnezzar and his successors (see Daniel 1—6). Babylon was overthrown after only several decades of prominence. The Lord had promised that the Jewish exile was only temporary, and, after the fall of Babylon, the Persian king allowed the exiles to return to Judah to rebuild the city and the temple. These events are recorded in Ezra and Nehemiah.
Because of the awful destruction caused by the Babylonians, Babylon became a symbol for the stereotypical enemies of God and His people. (Sodom and Egypt are also used in this way.) Babylon figures prominently in the book of Revelation as the ultimate enemy of God and persecutor of His people. “Babylon the Great” will be overthrown, but here is how she is described: “Then the angel carried me away in the Spirit into a wilderness. There I saw a woman sitting on a scarlet beast that was covered with blasphemous names and had seven heads and ten horns. The woman was dressed in purple and scarlet, and was glittering with gold, precious stones and pearls. She held a golden cup in her hand, filled with abominable things and the filth of her adulteries. The name written on her forehead was a mystery: Babylon the Great, the mother of prostitutes and of the abominations of the earth. I saw that the woman was drunk with the blood of God’s holy people, the blood of those who bore testimony to Jesus” (Revelation 17:3–6). Revelation also records the downfall of Babylon, lamented by people of the world (chapter 18), along with the rejoicing of the saints at her demise (chapter 19).
For years, many dispensationalists interpreted Babylon as Rome, center of a revived Roman Empire. With the ascendency of Saddam Hussein and war in Iraq, many changed their interpretation, thinking that Babylon might actually refer to a revived Babylonian Empire. For a while, Saddam Hussein attempted to rebuild Babylon, and he even fancied himself as the new Nebuchadnezzar. However, as events unfolded, it became evident that Hussein was not the final enemy of God and that he would not be successful in restoring a Babylonian Empire. It is usually risky to interpret the Bible in light of current events.
In summary, Babylon destroyed Jerusalem and the temple and became a symbol for the enemy of God and His people. Revelation uses this imagery, so Babylon in Revelation most likely does not refer to a revived Babylonian Empire but to a national entity that will persecute and destroy in “the spirit of the Babylonians.” The difference is that ancient Babylon destroyed Jerusalem as God’s judgment for her unfaithfulness. In the last days, “Babylon” persecutes believers who are being faithful, and it is Babylon who will be judged.
