The study was conducted to evaluate the concept of tradition and modernity historically and then to explore the demands and needs to rethink and reconstruct tradition and modernity of Islam with madrassah education in Pakistan. Tradition and modernity, both are essential; they are recognized as the complimentary means of arriving at the truth. Tradition helps to look back to the origin of life, to the foundations of divine religion and cultures. While modernity, on the other hand is the logical, practical and scientific thought that make human beings to function with their best capabilities in all spheres of life. Madrassah is the traditional school of learning where Islamic knowledge is imparted. It has always played vital role, socially, politically and economically in a Muslim society. Tradition and modernity in madrassah education means evolution of sources of knowledge and different aspects of madrassah education system. It takes into consideration both conceptual and institutional aspects of madrassah education in order to bring it at par with formal system of education. The study concludes that such a harmonious blend will result in producing graduates well versed in all spheres of knowledge. The study also explored and analyzed that the subject of madrassah education has acquired exceptional focus, nationally and internationally for number of reasons, particularly after 9/11. It has given momentum to already triggered debate about the need to reform Islam and religious educational institutions. The study found out that Muslims response to modernity is more specifically is the result of development within Islam itself, in addition to reaction to British colonialism in Indian Sub-Continent. The study also analyzed that the general reformist Islamic discourse is also synonymous with the extraordinary focus on the role of madrassah education in the society. It is evident historically that the madrassah education has always occupied a central position among the thoughts of religious scholars (the ulema) in terms of denominational discourses or their aims to lead and safeguard the personal sphere of Muslims or in recent times over issue of reforms. The study explore that, in reality, most of these reformist movements for revival of Islam developed networks of madaris or at least make an effort to institutionalize their ideas and principles. Islamic education has therefore, been formed as one of the vital ‗building blocks‘ of any Islamic society. The reformist Islamic discourses, gave rise to three responses i.e., rejectionist, adoptionist and revivalists. These responses found manifestation in madaris. Different schools of thought in Islam interacted and interpreted these reforms according to their own doctrines. It is for this reason that the researcher selected five madaris representing all schools of thought for case studies to highlight these issues. `The study takes the Islamic concept of modernity, and clarifies that it is different from western concept of modernity, modernisation, modern, and modernisms. Numbers of studies are available on different aspects of madrassah education, but none of the studies give full length detail to the concept of tradition and modernity with reference to madrassah education . There is a strong emphasis on the pursuit of madrassah education in the ongoing educational reforms in the country. Identifying researches on madrassah education around the globe, the discussion is broad in coverage and narrow in its focus when we emphasize the tradition and modernity in the madrassah education with special reference to Punjab (Pakistan). The study provides an overview of the current state of knowledge and evaluates the extent and needs of rethinking and reconstruction of tradition and modernity with madrassah education.