This article interrogates the interpretation of Islam in the legacy of theological liberalism. Ernst Troeltsch (1865-1923) has been labelled the figurehead of such liberalism. Islam is a recurrent referent in his thought, running through his theological and philosophical writings. While studies such as Tomoko Masuzawa’s immensely influential, The Invention of World Religions, contend that Troeltsch’s conceptualization of religion smuggles assumptions of the supremacy of Christianity from theological into non-theological research on religion, I argue that Troeltsch’s characterization of Islam clarifies how he both constructs and collapses the supremacy smuggling for which he is criticized. For the current controversies about Islam in the European and the American public square, Troeltsch is important and instructive because he captures both the problems and the promises of the theological thinking that came to be called “liberal” for the study of religion.