Since 2016 when the government of Uganda announced its intention to enact a policy about regulating religions and faith-based organizations, there have been contrasting responses from those this policy intends to regulate. The mainstream religious groups especially; the Moslem community, Anglican Church of Uganda, the Seventh-Day Adventist Church, Roman Catholic Church, Greek Orthodox church and generally all those that subscribe to the Inter-Religious Council of Uganda have welcomed the State's proposal. On the other hand, the proposal has met both stiff and liberal minded resistance from both the born-again churches and relatively newly founded religious faiths and groups. This is partly so due to the historical relationship between the State and Religious institutions which has been characterized by uncertainty at one time, and flowering at another. The contemptuous attitude of the born-again church towards the State's proposed religious and faith based organisations policy (RFBOs) calls for renewed interest in analysing church-state relations in Uganda. Using the institutional approach, this paper analyses the historical relationship that has subsisted between the state and religious institutions in Uganda, over the years, showing how this influences reaction of religious institutions to a State's attempt to provide a regulatory framework over them.