This paper explores the potential of Islamic finance as a mechanism for addressing the financing-environment nexus within Malaysia’s sea cucumber industry. Despite extensive discussion on Islamic finance in various sectors, limited research examines its role in promoting sustainable practices within aquaculture, particularly for the sea cucumber industry, which is vital to Malaysia’s Blue Economy. The study analyses Sharia-compliant financing instruments, such as mudarabah (profit-sharing) and waqf (endowment), play a transformative role by encouraging sustainable aquaculture practices, enhancing community welfare, and fostering environmental conservation. Additionally, the study underscores the importance of multi-stakeholder partnerships and proactive policy measures to support community-driven, sustainable aquaculture initiatives. This paper contributes to understanding how Islamic finance can integrate ethical investment principles into the marine economy, presenting a viable model for sustainable development within Malaysia’s sea cucumber industry.