With nearly two-thirds of the world’s Muslim population, Asia plays an important role in Islamic finance. The industry has experienced solid growth in the region in recent years due to robust demand for Shariah-compliant financial products as well as national governments’ efforts to support the development of Islamic financial markets. This Asia Focus examines the size and growth of Islamic finance, reviews recent reports and studies on the industry, discusses key benefits and regulatory challenges, and summarizes recent developments in Asia.