Baitul Maal Tamwil (BMT) is a community-based and cooperative microfinance approach, and combines economic and socio-religious objectives in providing financial services to poor people and helping the needy participate in a dynamic Muslim society. The study objective is to examine the development of the BMT sector in Yogyakarta and in particular to assess the role and performance of and assesses the extent to which the BMT's philosophy and modus operandi is sustainable in achieving the dual missions of poverty alleviation following Islamic principles. This study addresses research questions of how and what role of the BMT institutions, as the Islamic microfinance model in the Javanese Muslim community, and to what extent the BMT sector is sustainable