This article discusses the interaction between foreign and domestic influences on the development of Indonesian Islam during the first half of the 20^(th) century. It focuses on Indonesian Islam during the period of the rise of nationalist sentiment and the transition to independence- encompassing the final decades of Dutch colonization, the brief Japanese occupation, and the early years of the Indonesian Republic. This essay argues that this distinct interplay between foreign and domestic influences shaped the unique flavour of Indonesian Islam. The influences of communist Soviet policies, the issue of Pan-Islamism, and Japanese policies during the occupation period in the development of Islam are identified as factors responsible for profound changes in Indonesian Islam and its great influence on Indonesian society today.