This study explores the influence of artificial intelligence (AI) algorithms and digital literacy-based pedagogical strategies on students’ religious understanding, moderation, and the development of critical and digital spiritual awareness. The research addresses contemporary challenges in religious moderation education within the digital era, where algorithmic automation and content personalization may unintentionally shape biased or extreme religious perceptions. The study aims to identify the role of AI algorithms in shaping students’ religious learning, evaluate the effectiveness of integrating digital literacy and moderation pedagogy, and analyze the empirical impact of interactive learning modules on students’ reflective awareness. Using a qualitative case study design, data were collected through interviews with teachers and students, classroom observations, and documentation analysis of modules, quizzes, essays, and project reports. The findings reveal that AI algorithms exert a dual effect: they enhance access to diverse learning materials but potentially reinforce extremist narratives when unregulated. Integrative digital literacy and moderation strategies significantly foster critical thinking, empathy, and tolerance. This study highlights the urgency of embedding algorithmic literacy and religious moderation into educational curricula and positioning teachers as algorithmic mediators, offering both theoretical and practical contributions to digital-era Islamic education
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