Studies on multicultural and inclusive education policies in Indonesia have largely focused on general education, while critical analyses situating these two issues specifically within the regulatory and institutional framework of Islamic education remain limited despite the fact that Islamic education faces a distinctive tension between national standardization and local religious authority. This gap motivates the present study, which aims to critically analyze how multicultural and inclusive policies are formulated, the rationale behind them, and their impact on the quality and institutional development of Islamic education in Indonesia. The study employs a critical policy analysis design, drawing on national and sectoral policy documents including the National Education System Law (UU Sisdiknas), the Merdeka Curriculum, and Ministry of Religious Affairs regulations analyzed through content analysis and triangulated with recent academic literature and secondary performance data on Islamic educational institutions sourced from the Islamic Education Statistics (EMIS) and the Madrasah Performance Report (RKM) of the Directorate General of Islamic Education, Ministry of Religious Affairs. The findings show that multicultural and inclusive principles have been incorporated into Islamic education regulations in response to global demands and Indonesia's socio-cultural diversity; however, their implementation has generated structural tension between uniform national standards and contextual local religious authorityan original finding that constitutes this study's key contribution to the analysis of Islamic education policy. Theoretically, this study offers a framework for understanding the synthesis between policy and contextualized Islamic values; practically, it recommends the development of a policy evaluation model sensitive to the distinctive characteristics of Islamic education as an agenda for future research, government action, and institutional practice.