While Australian scholarship on Islamophobia often situates the phenomenon within paradigms of social cohesion and individual experience, little attention has been paid to how Muslim Community Organisations (MCOs) themselves conceptualise and respond to Islamophobia. This chapter provides a rich empirical analysis of Australian MCOs’ perceptions of Islamophobia as a multi-dimensional phenomenon operating across social, discursive, and political domains of power. Drawing on interview data with MCO representatives, it foregrounds their understanding of Islamophobia not merely as interpersonal prejudice but as an entrenched form of structural and cultural racism, shaped by Australia’s colonial history, global political alignments, and contemporary multicultural governance. The chapter explores how MCOs link Islamophobia to white privilege, securitisation policies, and the conditionalities of citizenship, while also navigating their role within a national framework that paradoxically promotes multicultural inclusion and subjects them to racialised surveillance. It argues that MCOs’ framing of Islamophobia shapes their civic-political agency, resulting in a preference for soft, grassroots-oriented responses that prioritise community empowerment, interfaith outreach, and educational initiatives. However, these efforts are often circumscribed by state-imposed positional practices that regulate Muslim political subjectivity and expression. Ultimately, the chapter highlights the ambivalent space MCOs occupy—between recognition and misrecognition, agency and constraint—within a state apparatus that simultaneously funds their inclusion and propagates the conditions of their marginalisation..