The Islamic finance industry in Malaysia has existed for more than 30 years. The entry into force of the Islamic Banking Law of 1983 enabled the creation of the country's first Islamic bank. Malaysia's long experience in building a successful domestic Islamic financial industry for over 30 years provides the country with a strong financial structure that adds to the richness, diversity and maturity of the financial system. (RosniaMasruki, 2010). Before the advent of Islamic banks, the financial market was a monopoly of conventional banks. However, in recent years Malaysian Islamic banks have found themselves operating in an increasingly competitive environment. Alongside conventional banking, Islamic banking has steadily evolved to become a major player in the Malaysian financial landscape. The establishment of Bank Islam Malaysia Berhad (BIMB) in 1983 truly marks the beginning of a new era in Islamic banking in Malaysia. Islamic banking has received a further boost with a system where conventional banks can open windows for Islamic banking products called interest-free banking. (Mariani Abdul Majid, 2003). However, the world has experienced several financial crises throughout history, particularly in the 20th century, starting with the Great Depression of the 1930s followed by the oil price boom of the 1970s. In addition to these major crises, minor collapses have occurred in the economy, which is normal, considering the cyclical nature of the economic system in economic output, inflation rate, GDP level, trade and other factors. Yet it does not happen in every cycle, or recession, that so many factors coexist simultaneously to shake the global economic system as much as happened in the last crisis that began in 2007-2008. (Renata JankaT......middle of paper......-free nature. Since the development of Islamic banks in Malaysia, it is imperative that Islamic banks play their role effectively and efficiently to contribute to the overall stability of the financial system, as well as the growth and development of the economy, as well as their decreased effectiveness during the global financial crisis. The questions that arise concern the ability of Islamic banks to survive in the Malaysian economy, as well as the performance and stability of the banks. Islamic Malaysia during the financial crisis remains the question. Although the instability of the financial environment is taken into consideration, would Islamic banks in Malaysia be able to withstand the financial crisis performance and stability. There are many reasons why Islamic banks can survive during the financial crisis in terms of performance and stability.