Istikharah, in Arabic, means, "seeking the best course of action." In Islam, it is used for approaching Allah through Prayer for guidance in a case when one cannot make up his mind. It should, however, be pointed out, that istikharah applies strictly to cases that are halal or permissible, since there cannot be a question of choice concerning matters that are considered haram (not permissible).
When faced with important decisions in life, a believer is persuaded to use all of his God- given resources, as well as consult people who are known for their knowledge, piety and sound opinion. After having done so, he can turn to Allah for guidance.
Humans are limited in knowledge, and Allah alone possesses perfect knowledge. Allah has told us that He alone possesses the keys to all that is good. He has also promised to help us, if we turn to Him earnestly and sincerely.
We see around us people doing all sorts of things for confirmation when faced with important decisions in their life. The Pre-Islamic Arabs resorted to the practice of divining of arrows or stirring of birds. In modern times, even some of the most prominent people consult astrologers, or psychics, or gurus or so called spiritual masters. Islam teaches that since Allah alone knows the unseen realities, and He alone is aware of what is good for us in an absolute sense, we must seek His help.
The Prophet, peace be on him, taught us how to do so. He told us that if we are faced with decisions in life and are unable to make up our mind, we must approach Allah through prayer. This prayer is called Prayer of Istikharah. It is a sunnah or a highly recommended act. The specific method of doing it, is as follows:
First, one must offer a prayer of two rak'ahs with the intention of seeking guidance from Allah. Then he should offer the following supplication:
Allaahumma innee astakheeruka bi ilmika wa astaqiruka bi qudratika wa as'aluka min fadlika al-azeem, fa innaka taqdiru wa laa aqdiru, wa ta'lamu walaa a'lamu, wa anta allaamu al-ghuyoob. Allaahumma in kunta ta'lamu anna haadha al-amra khayrun lee fee deenee wa ma'aashee, wa aaqibati amree fa uqdurhu lee wa yassirhu lee thumma baarik lee feehi, wa in kunta ta'lamu anna haadha al-amra sharrun lee fee deenee wa maa'shee wa aaqibati amree fa isrifhu annee wa isrifnee anhu wa uqdur liya al-khayra haythu kaana thumaa radhdhinee bihi
(O Allah, I seek Your help in finding out the best course of action (in this matter) by invoking Your knowledge; I ask You to empower me, and I beseech Your favor. You alone have the absolute power, while I have no power. You alone know it all, while I do not. You are the one who knows the hidden mysteries. O Allah, if You know this thing (I am embarking on) is good for me in my religion, worldly life, and my ultimate destiny, then facilitate it for me, and then bless me in my action. If, on the other hand, You know this thing is detrimental for me in my religion, worldly life, and ultimate destiny, turn it away from me, and turn me away from it, and decree what is good for me, wherever it may be, and make me content with it.)
After having done so, he should follow the decision that he is strongly inclined to. If he feels no such inclination, then he should choose one of the options; he can rest assured that Allah will guide his steps. It has been reported that the Prophet, peace be upon him, said, "One who asks Allah for guidance in choosing the best course of action will never be a loser."
It is not at all necessary for a person to have visions or dreams following istikharah. However, if a person does experience a vision or dream, and he feels strongly about it, he should follow it.