Can evolution be compatible with religion? Yes.

Although some denominations have doctrinal conflicts with science in general &/or evolution in particular, many religions and denominations do not.

That evolution and religion can be reconciled is illustrated by the fact that many religious organizations do not see evolution as being in conflict with God as creator. The Pope's Magisterium on Evolution eloquently describes how evolution and Christianity can be reconciled, according to Roman Catholicism.

In addition, many religious scientists, e.g. the Affiliation of Christian Geologists, the American Scientific Affiliation, can accept an ancient universe, an ancient earth, and evolution, and reconcile these with their commitment to their religion.

As it happens, one of the strongest defenders of evolution in debates is Kenneth Miller (link), a devout Christian. In his recent book, Finding Darwin's God (link, link) he eloquently describes how he reconciles evolution and Christianity, science and religion. Here is a two hour video of Ken Miller addressing Case Western on The Collapse of Intelligent Design (YouTube); whereas, here is link on him speaking on Finding Darwin's God (RealPlayer).

Here's a video from the AAAS website on the Dover PA intelligent design challenge to their high school curriculum (link; if that link doesn't work, try this one on YouTube). About 6 minutes into this video, in a section entitled, "Is the scientific community opposed to religion?",  two of the science teachers interviewed  who stood up to their school board tell us that they are Christians, and they openly discuss science and their faith, as does Francis Collins (head of the human genome project).  Alan Leshner (CEO of the AAAS) and Connie Bertka (Director of the AAAS's Dialogue on Science, Ethics and Religion) discuss that science and religion need not conflict.

Although it is the case that some famous evolutionary biologists are (were) also atheists, neither atheism nor theism is a logical deduction of science in general, or of evolution in particular. Religious and supernatural hypotheses may well be true, but by their very nature they are unfalsifiable, and as such, lie outside the realm of scientific inquiry.

"Science is a way of knowing about the natural world. It is limited to explaining the natural world through natural causes. Science can say nothing about the supernatural. Whether God exists or not is a question about which science is neutral."

from the National Academy of Sciences (link)
Science and Creationism (link), Teaching About Evolution and the Nature of Science (link)
Chapter 5, Frequently Asked Questions About Evolution and the Nature of Science (link)