This study examines the effectiveness of government policies on Islamic education in Indonesia and their implications for the quality of madrasah graduates in terms of academic achievement, spiritual development, and competitiveness in the labor market. It also explores the revitalization of madrasahs and the integration of Islamic and general education curricula. Specifically, this study aims to: (1) identify government policies governing Islamic educational institutions, particularly madrasahs; (2) analyze the impacts of these policies on Islamic educational institutions; and (3) evaluate the quality of madrasah graduates in relation to academic performance, spiritual development, and employability. This study employs a library research method using a descriptive qualitative approach to analyze relevant scholarly literature. A systematic review of 25 sources published between 2015 and 2025 indicates that educational policies, including the 2013 Curriculum and the Merdeka Belajar (Freedom to Learn) curriculum, seek to improve students' cognitive competencies. However, challenges remain in strengthening affective competencies and spiritual development. Furthermore, findings reported in the reviewed literature indicate a correlation coefficient of r = 0.5999 between the integration of religious and general education curricula and the implementation of strategic management, although further clarification of the underlying study and statistical relationship is needed. Major challenges include disparities in educational infrastructure and difficulties adapting to digital transformation. Accordingly, this study recommends strengthening School Operational Assistance (Bantuan Operasional Sekolah, BOS), enhancing collaboration between the Ministry of Religious Affairs and the Ministry of Primary and Secondary Education, and promoting integrated curricula that balance Islamic values with general knowledge. The integration of educational technology and the strengthening of Islamic pedagogical practices are also essential to improving educational quality. These efforts require sustainable financial support and coordinated institutional governance to ensure that madrasahs produce graduates who are academically competent, spiritually grounded, and competitive in the contemporary labor market.