This article examines the politics of school-based management (SBM) in Hong Kong, with a specific focus on the conflicts between the state and three Christian churches (Catholic, Anglican, and Methodist) running state-funded religious schools. Although the state based its advocacy for SBM on neoliberally driven ideas of participation, transparency, and accountability, religious groups expressed worry about the loss of control over schools as an institution of value transmission anchored in religious beliefs. This article uses the SBM controversy as a case study to advance geographical debates on religious schools and argues that neoliberalism forms a necessary lens through which to examine the state-religion relations concerning religious schools. It offers an analytical framework that emphasizes the mutually constitutive relationship between religious schools and state building. It lends evidence to this argument by situating religious schools in the context of neoliberalization of education policies and arguing that faith-based sensibilities create new vectors of resistance to neoliberalism as a distinctive secular formation. The empirical analyses address three questions. First, we develop a detailed analysis of the discourses and rationalities upheld by the Hong Kong government and the churches. Second, we consider interactions and exchanges between the state and the churches, focusing on the assertions, negotiations, and concessions that both needed to make in a prolonged struggle over the decision-making process. Third, we reflect briefly on the aftermath of the passing of SBM to situate the churches' concerns in a broader context of neoliberal education policy. [Copyright of Annals of the American Association of Geographers is the property of Taylor & Francis Ltd.]