The major purpose of this article was to disclose the quality of education in the Muslim world and try to clarify the misperceptions in the West and in the Muslim world about Islamic education. It also tries to highlight the efforts of Islamic scholars in filling the gaps between them. Education in the Muslim world and Islamic education have gained much attention in the past few years due to the perceived link between those issues and concerns for development and security in the Muslim world and beyond. This paper attempts to define Islamic education, provide an in-depth analysis of the educational systems and Islamic education in the Muslim world, using political-historical, socio-cultural, and religious analytical approaches, and identify challenges in improving Islamic education. The paper concludes with a synthesis of approaches and strategies for improving education in Islamic schools of Islamic world.