Islamic banks in Malaysia have been growing rapidly since their debut in 1983, and are now an important component in the economy and financial system, which aims to become a major international Islamic finance hub. The policies, regulations and activities proposed and implemented by the Bank Negara Malaysia (BNM, the central bank) have significantly contributed to this development. It has been further enhanced by regulation of the Securities Commission. This chapter provides an overview of the role of BNM in regulating the Islamic banking industry in Malaysia.