Religious shame damages the self and creates wounds that may never heal. One extremely harmful way religious institutions perpetuate shame on their parishioners and clergy occurs in their formal disciplinary processes. A shame-driven disciplinary process employs what I describe as four characteristics of institutional shame: l) Public exposure, 2) public judgment, 3) isolation from 'the faith community, and 4) prescribing a person's identity to them (e.g., regarding them "flawed" or "evil"). A central theme of this project is how the four shame characteristics drive various religious disciplinary actions, especially disciplinary actions against clergy for nonsexual infractions. To confront this religious shaming process, I present a theology of mercy that relies on God's mercy in the sacraments and mercy expressed in the life and ministry of Jesus. First, my research explores religious shame from a practical and psychological standpoint; next, it examines the contributions of depth psychology theorists Carl Jung and Heinz Kohut to shame studies; and finally, it investigates the role of sacramental theology as a means to confront religious shame. Ultimately, I propose a theology of mercy that calls for reform of current shame-based disciplinary practices.