Early modern political thought transformed toleration from a prudential consideration into a moral obligation. Three questions need to be answered by any explanation of this transition: Did religious toleration really become an obligation of the state in this period? If this was the case, how could tolerating heresy and idolatry possibly become a moral duty to Christians? How could Europeans both condemn practices as idolatrous and immoral, and yet insist that these practices ought to be tolerated? To answer these questions, the article shows how the early policy of toleration in British India was constituted by a Protestant theological framework. Toleration turned into a moral obligation, it is argued, because the Reformation had identified liberty in the religious realm as God’s will for humanity. This gave rise to a dynamic in which Christian states and churches were continuously challenged for their violations of religious liberty. The principle of toleration developed as a part of this dynamic.