This article addresses challenges of multicultural education in the context of increasing transnational mobility and growing diversity in schools, and suggests ways to convert these challenges into new resources in education. We start with a brief overview of the contemporary transnationalism and new understanding of space and culture (Levitt & Glick-Schiller, 2004), and how they pose special challenges in multicultural pedagogy. Specifically, we examine the misleading conceptualizations and practices of culture and identity in multicultural education (Hoffman, 1996). Then, we redefine the culturally responsive, transformative pedagogy with focuses on its multidimensional and empowering aspects. Multiliteracy practices (New London Group, 1996) of students from culturally and linguistically diverse families are acknowledged as a new pathway to allow a wider range of learning opportunities, transform the interactive patterns between students and teachers, and empower students to critically reflect on, and share their identities.