Interfaith dialogue is a crucial technique for mitigating interreligious tensions that exist around the world. However, It is in the name of religion that we see many heinous crimes being perpetrated resulting in the deaths of many innocents despite the fact that every religion promotes universal love and compassion for other people .Today, Islam has been misunderstood due to the lacking of proper Islamic knowledge. So research is needed to mitigate ambiguity regarding Islam’s proper knowledge and Islamic perspective on interreligious dialogue. This article has been designed to go through the Qur’an and the Prophet’s ﷺ way of life in order to clarify how Islam views interfaith dialogue and also to warn of various hazards to be guarded against while in dialogue. The study demonstrates how Islam plays a unique role in encouraging interfaith dialogue by ensuring justice, equal rights, and religious freedom for all religions, cultures, and civilizations, as well as accepting all prior prophets as Prophets of Islam .The study concludes by emphasizing that Islam is a comprehensive faith that promotes peaceful interreligious coexistence. It can be used as a model for resolving interfaith conflicts and promoting interfaith harmony and peaceful coexistence in today's world of diverse faiths and traditions .This research adopted the qualitative method in the form of contextual analysis and the historical interpretation of the Qur’an and Sunnah.