How do states decide to extend or withhold international recognition in cases of contested sovereignty? We focus on how religion shapes the incentives of states in making this decision, both at the domestic level through religious institutions and at the international level through religious affinities. States with transnational religious ties to the contested territory are more likely to extend recognition. At the domestic level, states that heavily regulate religion are less likely to extend international recognition. We test these conjectures, and examine others in the literature, with two new data sets on the international recognition of both Palestine and Israel and voting on the United Nations resolution to admit Palestine as a non-member state observer, combined with global data on religious regulation and religious affinities. In cases of contested sovereignty, the results provide support for these two mechanisms through which religion shapes foreign policy decisions about international recognition.