A plethora of cross-cultural research studies has been conducted and published on the conflict or collision between western models of education and indigenous knowledge and learning. Following on the visions of these studies, the research reported in this thesis explores how these tensions between differing bodies of knowledge impact youth identity in non-western societies. More specifically, the study examines the case of how western models of education impacts the Palauan traditional educational models and whether or not the privileging of western systems of learning over Palauan systems does in fact have a negative impact on the development of identity, well-being, and empowerment of Palauan youth today. Theoretical approaches in this study derived from the knowledge of Palauan elders and scholars as well as literature works of Freire, who argues for transformative education as a means of empowering people, and Lave and Wenger‟s theory of legitimate peripheral learning. Methodological approaches include narratives and a Palauan dialogic approach using questionnaires, unstructured and semi-structured interviews. Data were collected from June to September 2009 in Palau. Selected participants were the youth of Ulimang village in Ngaraard and a particular group of Palauan elders and scholars that are involved in Palauan education, knowledge, and research. Data were analyzed in two stages: a questionnaire for Ulimang youth and interviews for the Palauan elders. A range of concepts addressed in the analysis, such as cheldecheduch and relationships, strengthened the belief that Palauan knowledge was important in the lives of the Ulimang youth. The need to maintain Palauan knowledge to empower Palauan identities and to support the quality of life for Palauans was articulated by the Palauan elders. The importance of Palauan knowledge and values was stressed from the participants and emphasized how it informs identity development in Palau.