The reform and modernization of Higher Islamic Education has been an ongoing concern for many a Muslim-majority state since the advent of modern Islamic studies in the postcolonial era. Fraught with political and ideological controversies and complications, many of the attempts to reform and modernize Islamic Higher education has met with stiff political resistance, particularly from conservative Islamists who see such reform measure as a means for the state to ‘weaken’, ‘contaminate’ or ‘corrupt’ pure Islamic teachings. Furthermore the question of what essentially constitutes and Islamic modernity itself remains a matter of incessant debate among Muslim ideologues, reformers and modernist themselves. This paper looks at the development of Higher Islamic education in Indonesia, with particular focus on the developments during the Suharto was more concerned with the challenge of controlling potential domestic opposition from the Islamists of the country, rather than foregrounding and Islamic reform project per se. Yet ironically as a result of the reforms introduced during this period – which includes the introduction of a research-based approach to religious studies – Indonesia has actually pioneered the Islamic educational reform process and may in fact be one of the few Muslim countries in the world where a truly scientific approach to Islamic studies has been established.