What does the word "Al-Mahdi" mean? Who is Al-Mahdi (as)?

Mahdi means, literally, "the one who is Rightly Guided." Al-Mahdi (as) is a figure of profound eschatological significance in Islam. It is a title, and it is one that has been falsely claimed by diverse leaders thoroughout Islamic history. The just rule of the true Al-Mahdi (as) will herald the approach of the end of the time. Both the Sunni and Shi'ah adhere to a belief in Al-Mahdi (as), although the Shi'ah have developed the doctrine more deeply, tying it up with the concept of ghaybah and the Twelfth Shi'ah Imam.25
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25. A Popular Dictionary of Islam, p.156

Adapted from the book: "The Awaited Saviour; Questions and Answers"