Over the last ten years discussions on Indonesian Islam have pointed to the emergence of Islamic radicalism. The religious conflicts in Ambon and Poso, the Bali bombings, the church burnings, and a series of nightspot raiding in Jakarta bear witness that Indonesia is experiencing change towards radicalization. The old attributes of Indonesian Islam that was tolerant, respectful, and “different from the Middle East,” are now being contested. Scholars and journalists now overtly speak of the grievous threat of Indonesian Islam, in a way that they ignore the variety of its adherents: traditionalists and modernists, liberals and fundamentalists, santri and abangan. This article demonstrates that apart from the rise of Islamic radicalism in Indonesia, there is a process of moderation and progress. The failure of Islamic political parties in the last two general elections (1999 and 2004) and the rise of young liberal Muslims bear witness that Indonesian Islam is never monolithic. By analyzing the development of political Islam and the evolution of Islamic liberalism, this article argues that Indonesian Islam will not radicalize as some people like to think.