The aim of this chapter is to evaluate the potential contributions of Islamic finance as an important faith-based approach for financing environmental policies and programs in Islamic countries. While the need for environmental protection and sustainable development have been recognized in the laws of virtually every country on earth, countries often struggle to mobilize environmental finance, i.e the financial resources and tools needed to implement environmental protection programs. The global rise of green or environmental finance as an approach to meet climate change mitigation and adaption financing has highlighted the nexus between environmental finance and Islamic finance as both share similar underlying ethical principles and social and environmental objectives. In this regard, Islamic finance has recently witnessed the development of green sukuk, a new asset class targeting projects that address climate change. The chapter discusses the potential of Islamic finance as a viable environmental finance alternative. In so doing, it will first discuss the ethical and legal principles underpinning Islamic environmental finance. Second, it will discuss the legal and institutional gaps that currently hinder the wide scale integration of Islamic finance into environmental law in Islamic countries.