The aim of this study is to examine how the historical genealogy of Islamic educational tradition, particularly the tradition of teaching and learning, has contributed to the development of Islamic education in Indonesia. By drawing together in an analytic way a historically based description of the social and political circumstances surrounding Indonesian Islamic education, the study discusses some significant issues concerning the religious base, knowledge base, structural form, and the pedagogical approach of Indonesian Islamic education, all of which are important to the development of a modern form of Islamic education. The argument of the thesis is that the existing values of the Islamic tradition in education, particularly evident in Madrasah schools, provide a valuable basis for further developing and reconstructing an effective Islamic education system in Indonesia. However, there is also a strong need to construct an Islamic education curriculum in Indonesia that can meet the challenge posed by the circumstances generally understood as 'modernity'. The quality of teaching and learning in the Madrasah are very much influenced by the quality of the wider Islamic education programme. Any change in the curriculum of Islamic education will thus have significant effects on the quality of the Madrasah schools in Indonesia. This thesis will thus conclude by suggesting some implications for further development of Islamic education that arise from the study. This is a qualitative study using an historical genealogical approach to discover, understand and analyze the challenges currently facing Islamic education In Indonesia. The techniques for collecting data involved, primarily, a critical reading of historical and contemporary policy documents. Primary and secondary sources were also collected, studied and subjected to a critical reading in the production of this account of Indonesian Islamic education.