Certain places are important in Islamic history, in large part because they were important in the life of Muhammad, and are also important to present-day Muslims.
Most of Islam's sacred places are in the Middle East, specifically the Arabian Peninsula. The area of ancient Mesopotamia (mostly in modern Iraq) and northern Africa are important to in Islam as well, even though they are not as equally sacred as places like Mecca and Medina.
The most sacred place in Islam is the Ka'ba in Mecca, Saudi Arabia. The Ka'ba is a shrine, built by Abraham according to Muslim tradition, around a black stone. The Prophet Muhammad specifically designated Mecca as the holy city of Islam and the direction (qibla) in which all Muslims should offer their prayers.
The second most important place in Islam is Medina (or Medinah), the "City of the Prophet," is in the Hejaz region of western Saudi Arabia. It was to Medina city that Muhammad fled when he was initially driven out of Mecca, and the place where he attracted his first followers.
The third most sacred city in Islam is Jerusalem, which was the original qibla (direction of prayer) before it was changed to Mecca. Jerusalem is revered because, in Muslim tradition, Muhammad miraculously traveled to Jerusalem by night and ascended from there into heaven.
Karbala is a city in Iraq, located about 100 km southwest of Baghdad. Shia Muslims consider Karbala to be one of the holiest places in the world, second only to Mecca and Najaf.
Najaf is one of the holiest cities in Shia Islam and is the center of Shia political power in Iraq.