Student heterogeneity in madrasahs demands instruction responsive to individual differences. The Merdeka Curriculum requires diagnostic assessment as a foundation for differentiated instruction, yet its implementation in madrasahs remains limited. This study aims to explore diagnostic assessment and differentiated instruction practices by Islamic Religious Education (PAI) teachers, and to measure students' intrinsic motivation, perceptions of differentiation, and teacher self-efficacy. Using a sequential explanatory mixed-methods design, data were collected through questionnaires from 34 PAI teachers and 148 students in madrasahs in Purwakarta Regency. Instruments included Likert scales (teacher efficacy 1–6, student motivation and perceptions 1–5) and open-ended questions. Descriptive analysis showed high student motivation (M=4.46), highly positive perceptions of differentiation (M>4.30), and high teacher efficacy (M=5.09). Thematic analysis identified three main themes: formal diagnostic assessment, differentiation in Qur'an memorization, and constraints of time and classroom management. The study concludes that teachers possess strong psychological capital but require systemic support to overcome structural barriers. This research contributes to strengthening the integrated diagnostic assessment–differentiation model in the context of Islamic Religious Education in madrasahs.
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