The focus of the article is on how a new approach to religious education (RE) in diversified societies can be constructed on the basis of the theory of pedagogical transaction presented by John Dewey. Reflections of developing RE are very current in Western secularized societies. We believe that Dewey's pragmatist philosophy of education and philosophy of religion are still highly relevant to RE. The article consists of three sections: (1) contemporary discussions of RE, (2) reflections on Dewey's philosophy of religion, especially religious experience, and (3) the implementations of Dewey's theory to RE. We conclude by applying pedagogical transaction theory to current challenges in order to design new models of RE in diversified societies. Accordingly, we construct a theory of RE for democratic, multifaith societies that are based on mutual understanding, respect, and recognition of active citizens living in diversified society.