Waqf in Indonesia faces low productivity, of 451,000 waqf asset points, only around 40,000 have economic value, meaning they have not yet been optimally utilized to support sustainable development. In the context of SDG 8 indicators, which emphasize productivity, entrepreneurship, and decent work, istibdal emerges as a strategy to replace unproductive waqf assets with those that bring greater public benefit. This study analyzes the concept and implementation of istibdal as a mechanism for managing waqf assets that has the potential to enhance economic productivity, promote entrepreneurship, and expand employment opportunities, while also identifying challenges and solutions from a fiqh perspective. Dompet Dhuafa is selected as the case study because it implements a structured istibdal practice to optimize waqf assets. The research method used is a descriptive qualitative with a normative–empirical approach. The empirical approach is employed to understand the implementation of istibdal at Dompet Dhuafa through in-depth interviews with nazhir, BWI officials, and waqf law experts. Meanwhile, the normative approach is used to examine the fiqh perspectives of the four Sunni schools. The data were then analyzed qualitatively using a thematic analysis model with ATLAS.ti 25 to identify key themes that illustrate the patterns of implementation, challenges, and the relevance of fiqh to the practice of istibdal in waqf management. The implementation of istibdal at Dompet Dhuafa is carried out through a structured and accountable process that transforms underproductive waqf assets into more productive ones. By reinvesting istibdal proceeds into higher –value assets, Dompet Dhuafa enhances productivity, supports entrepreneurship, and expands opportunities for decent work, demonstrating clear contributions to SDG 8. Despite these benefits, the practice faces external challenges such as lengthy bureaucratic procedures and limited public understanding, as well as internal constraints related to institutional management capacity. Solutions include strengthening institutional SOPs, improving public literacy, enhancing collaboration with external institutions, and reinforcing transparency and accountability. From a fiqh perspective, the istibdal implemented by Dompet Dhuafa is justified based on the principle of maslahah emphasized in the Hanafi and Hanbali schools, which allow asset substitution to achieve greater public benefit. However, the Shafi‘i and Maliki schools adopt stricter views that underline the need for caution. Therefore, waqf institutions are encouraged to enhance management capacity, transparency, and post-istibdal evaluation to ensure more productive and sustainable governance of waqf assets.