The primary objective of the study is to explain the influence of Islamic microfinance in the progress of entrepreneurship development in Pakistan. Islamic microfinancing having unique characteristics of risksharing contracts and the distribution of wealth across the society through specific financial instruments has been gaining popularity in entrepreneurship and opening new avenues for future research. Selfadministered questionnaires were used to collect the data from the users of Sharia-compliant products. The results of multinomial logistic regression reveal that Islamic microfinance has a significant impact on micro-entrepreneurship development. The policymakers, who promote the development of new ventures using Islamic microfinance, should ensure broadened access of the micro-entrepreneur to microfinance products. Moreover, Islamic microfinance institutions can contribute a lot to improving the living standards of entrepreneurs by becoming a link between government and people in policy implementation.