During the New Order period, religious identity emerged as the most important form of ethnic identification. The Suharto government increased the use of state instruments to repress Islamic demands and contain religious conflict. Yet, these policies ironically contributed to a reinforcement of religious identities. Over the three decades of Suharto's rule, identities as Muslim or Christian intensified, leading to greater demands for protection and recognition of their respective communities.

The question of an Islamic state had been one of the most important challenges to the nationalist vision of Indonesia. Rejection of the Jakarta Charter at the time of independence had not been well received by Muslim groups that had supported the Republic. The first critical juncture had ended with an ambiguous role for Islam in the polity: the question was left open-ended and subject to renegotiation during discussions for a final constitution. The Darul Islam movement followed the path of armed rebellion to promote an Islamic state. Other political organizations, such as the Islamic party Masyumi, chose to adhere to established political processes to further an Islamic agenda. Islamic parties failed to obtain strong support in the 1955 elections but subsequently wielded considerable power in the Constituent Assembly that was formed to negotiate the new constitution. They prevented the assembly from reaching a compromise that excluded Islam as a state ideology and negotiations were stalled as a result.

When regional rebellions arose in the late 1950s, several of them joined the Darul Islam.