The Preamble to the State Constitution of the Republic of Indonesia (1945) contains the Five Principles of the foundational philosophical theory of Indonesia, called Pancasila. The Five Principles are: 1) Belief in One Supreme God 2) A just and civilized humanity 3) Indonesian unity 4) People’s democracy led by wisdom through consensus and representation 5) Social justice for all Indonesian People. This thesis focuses on the importance of building interreligious dialogue within Pancasila using the reality of the current situation. The aim is to investigate the historical origins and development of Pancasila as the foundation of Indonesia’s governing philosophy, as well as the methodological underpinnings of how interreligious dialogue helps to focus particular questions on Pancasila and religious diversity in Indonesia. This thesis investigates how the invention of agama (religion) is essential to the Indonesian concept of citizenship. It highlights why and how the development of the concept of religion and its connection with the First Principle of Pancasila can promote or hinder interreligious harmony and true freedom of religion. Until recently, Indonesian citizens had to declare one of only six official religions on their essential civil documents in order to receive the services and civil rights guaranteed by the state. The identity card offers a concrete example of the intersection of religion and the state in Indonesia as one of the rubrics on the identity card is agama. The main concerns with Pancasila as the foundation of a state’s governing philosophy are two, and these are interconnected: the requirement of a belief in One Supreme God and the limited number of religions accepted within Indonesia. This thesis also examines the Islamic perspective on interreligious dialogue and religious pluralism in Indonesia by investigating the reality of the current situation. This is done by looking at the historical origins and development of the MUI (Majelis Ulama Indonesia, the Council of Indonesian Ulama) and the part it played in Suharto’s authoritarian New Order regime. It also assesses and draws upon Western Christian and Muslim thinkers in the field of interreligious dialogue and religious pluralism. These contributions not only provide an avenue for reconsidering the Pancasila state ideology in a pluralistic world but also lay the groundwork for an innovative approach towards interreligious dialogue in Indonesia.