This study aims to analyze the implementation of Qur’anic and Hadith values in Islamic Religious Education (PAI) learning and their impact on the formation of students’ religious character at SMA Negeri 1 Rantau Bayur Banyuasin. The background of this research is based on the importance of integrating Islamic values into formal education to develop students who are intellectually competent and morally upright. However, field realities indicate that the implementation of these values has not been fully optimal due to limited instructional time, students’ varied understanding, and insufficient religious facilities. This research employs a qualitative approach with a field research design. Data were collected through observation, in-depth interviews, and documentation involving teachers, the principal, and students. The findings reveal that the implementation of Qur’anic and Hadith values is carried out through lesson planning, role modeling, habituation, and value reflection. Furthermore, the school’s religious environment such as daily Qur’an recitations, congregational prayers, and Islamic celebration activities plays a significant role in strengthening students’ religious character. The results show an improvement in discipline in worship, politeness, moral responsibility, and social awareness among students. Values such as honesty, responsibility, and tolerance have begun to internalize within the school culture. Nevertheless, teachers still face challenges, including time constraints and students’ diverse levels of understanding. Therefore, teacher collaboration and the optimization of school-based religious activities are recommended to enhance the effectiveness of PAI learning grounded in Qur’anic and Hadith values. This study contributes to the development of a holistic and contextual model of Islamic education.