Despite strong debates about the role of Islamic education in Western societies, very little is known about the ways these schools can affect how Muslim children feel about these societies and themselves. This research examined how the self-esteem and national identification of Islamic schools students in a non-Muslim country (N = 707; Mage = 10.02; SD = 1.25; 56.9% girls) depend on their perceptions of religious discrimination and the student-teacher relationship, as well as their teachers’ religious background and implicit religious attitude. Children reported substantially more religious discrimination against their group than against themselves. Religious discrimination was associated with lower self-esteem and weaker national identification, whereas a close bond with the teacher was associated with higher self-esteem and stronger national identification. Children with a non-Muslim teacher reported more national identification than students with a Muslim teacher, but less so if this teacher had a comparatively positive attitude toward Muslims. Results provide insights on how self-esteem and national identification can be encouraged within the context of Islamic education.