Abstract This article is aimed at elaborating the challenge of Islamic studies in the universities of contemporary Muslim worlds and its proposed solution. This delves at the outset the Muslim intellectual tradition in the past where Muslim established their own discipline of knowledge and subsequently assimilated some concepts and theories from other civilizations. However, unlike Muslim intellectual in the past, the contemporary Muslims intellectual adopted different concepts, theories and approaches in the field of Islamic studies and modern sciences from foreign civilization without prior process of assimilation. As a result, Muslim minds are confused whether they have to employ foreign concepts and theories or hold the concepts and theories from Islamic intellectual tradition. In this predicament the researcher proposed two steps: first is that Muslims intellectual in the Islamic universities should develop Islamic studies in response to the contemporary challenge by re-conceptualizing key concepts of various field of Islamic studies. Second, Muslim intellectual should work on the process of assimilation or Islamization of modern sciences by criticizing, selecting, adapting, remolding and refining foreign concepts incompatible with Islam to form Muslim own discipline of knowledge