The main goal of this paper is to present the systematic analysis of the Council of Europe's key documents on the religious dimension of intercultural education and to define a theoretical framework on the role and importance of religious education in the context of upbringing and formation of children and youth when interacting with a religious plurality. The methodology of this paper is based on the content analysis of the Council of Europe's policy papers. Policy papers are related to the religious dimension of intercultural education which has not been presented in the published works on this topic in Croatia. The content analysis has confirmed the following thesis: religious education contributes to the positive patterns of behavior, and the religious dimension of intercultural education contributes to the goals of intercultural education (coexistence in cultural diversity, knowledge about cultural diversity, and skills for intercultural dialogue). The importance and role of the religious dimension of intercultural education have been recognized through the removal of negative patterns of behavior such as stereotypes, prejudices, violent forms of behavior. All of these have been related to a lack of religious literacy and knowledge among children and youth. The role and importance of religious education have been acknowledged on three levels: cognitive, behavioral, and emotional. Based on this theoretical framework the paper has confirmed that religious education, both in confessional and non-confessional form, contributes to the coexistence in a multicultural society by deepening religious knowledge and enabling students for dialogue as well as openness towards religious plurality. In the first part, the paper presents the origins and main elements of interculturalism. The second part introduces sociopolitical events in the 20th and 21st centuries in America and Europe which have led to differentiation of multicultural and intercultural education. The main focus of the second part is to define the term intercultural education, its goals, and role during the historical changes. International organizations and their policy papers are the main source of information to the goal. The challenges of intercultural education have been related to Croatian policy framework and educational system. The focus of the third part is the religious dimension of intercultural education which has been related to religious education. Analysis of the Council of Europe's policy papers is the main resource for building the theoretical argument on the role and importance of religious education within goals of intercultural education.