The problem of modernization of Islamic higher education in Indonesia has been long debated among experts. Some of them agree that Islamic higher education is left behind compared to general or non-Islamic higher education, whereas middle-class moslem society in Indonesia has increased. This article tries to explain the latest development of Islamic higher education in Indonesia and identify key issues that hamper the modernization of Islamic education. The data are collected from selected documents, articles, and recent research from experts. Modernization of Islamic higher educations can be done through strengthening institutions’ capacity, improving the quality of human resources, improving student activities, and upgrading research and ...