Yes, Islam tolerates other beliefs. It is one of the functions of Islamic law to protect the status of minorities. History provides many examples of Muslim tolerance towards other faiths and belief systems. One is example is that when Muslims ruled over Spain, they had such tolerance of other beliefs that the Golden Age of the Jewish Civilization flourished under their rule. Additionally, Islamic law allows non-Muslim minorities to establish their own courts so that they may be judged according to their own laws. Finally, although the majority of Surah’s (chapter of the Qur’an) were recited during years of Muslim persecution in Mecca, none of them contain commands to fight or afflict violence to people of other religions.
References:
Al-Dhaheri, A. A. (2013). 40 Top Questions About Islam. IslamHouse.com . http://www.icorlando.org/pdfs/en_40_Top_Questions_About_Islam.pdf
Hyseni, N. Tolerance and the Qur’an. Answering Islam. http://www.answering-islam.org/Quran/Themes/tolerance.html