In 1904 he was taken to court, accused of cursing Abdul-Qadir Gilani and calling the Quran an "obsolete book out of step with the progress of our age".

He was largely defended by the French newspapers and condemned by the Arabic ones, and was ultimately found guilty and sentenced to two months in prison.

[4] In 1905 Thâalbi published L'esprit libéral du Coran ("the liberal spirit of the Quran") with César Benattar (who had been his defense lawyer) and el-Hadi Sebai.

It claimed that through a literal, rational, scientific, liberal, and faithful interpretation of the Quran and hadiths the Muslim people will recover their past intellectual greatness, and with the civilizing influence of the French, the descendants of those that proclaimed the principles of the French Revolution, Muslims minds, freed at last of all superstitions and prejudices, will be able to one day contribute, in collaboration with their Protectors, to the global civilization.

[4] After World War I, Thâalbi returned to Tunisia and joined former Young Tunisians who requested a decrease of French control at the Paris Peace Conference.