Islamic Religious Education (IRE) plays a strategic role in instilling moral values and shaping the character of young children. Early childhood is a golden period in a child’s personality development, thus requiring a learning approach that aligns with their psychological characteristics and developmental stages. This study aims to examine the role of Islamic Religious Education in instilling moral values in young children through a developmental psychology approach, as well as to analyze the implementation of PAI instruction, the roles of teachers and parents, and their impact on children’s moral behavior. This study employs a qualitative approach using a descriptive qualitative research design. The research was conducted at Wadi Fatimah Islamic Kindergarten, Kedawung Subdistrict, Cirebon Regency, with the research subjects being classroom teachers and parents of students selected through purposive sampling. Data collection was conducted through observation, in-depth interviews, and documentation. The data were analyzed descriptively to obtain a comprehensive picture of the process and results of instilling moral values in children. The research results indicate that the implementation of Islamic Religious Education through habit formation, modeling, and contextual learning activities is capable of positively shaping children’s moral behavior. The developmental psychology approach helps children understand moral values through concrete experiences and behavioral reinforcement. Additionally, collaboration between teachers and parents has proven to play a crucial role in strengthening the internalization of moral values in children, both at school and within the family environment. This study concludes that Islamic Religious Education designed in accordance with the principles of early childhood developmental psychology is effective in instilling moral values and is worthy of being used as a reference in the development of Islamic Religious Education (PAI) at the early childhood education level.