Published information on the principles of Islamic banking and finance and their applications is growing day by day. Pakistan is one of the 57 Islamic countries with a total population of over 170 million where the majority of the population practices Islam. Steps to Islamize the banking system in Pakistan were initiated during 1977-78. The elimination of interest from the operations of specialized financial institutions took place in 1979 and from commercial banks in the period 1981-85. Commercial banks in Pakistan have been forced to accept any deposit without interest and all deposits have been treated on the basis of profit and loss sharing since 1985. Islamic banking is defined as a banking system in consonance with ethics and value system of Islam and is governed by the rules and regulations guided by Sharia'h. The main sources of sharia'h are the Quran, Hadith, Sunnah, Ijmah, Qiyas and Ijtehad. According to Islamic sharia'h, interest (Riba) is prohibited, meaning that institutions are not allowed to offer a fixed rate of return on deposits and are also not allowed to charge interest on loans, income from and investments in all unethical economic activities such as investments. in gambling, pork, alcohol etc. are prohibited (Ayub, 2008). Financial assets in Islam are a true resource supported by the ability to create added value. The most commonly used Islamic banking instruments in Pakistan are Mudaribah, Musharikah, Murabaha, Ijarah, Bai-Muajjal and Bai-Salam. This study will help researchers understand the awareness of Islamic banking culture and attitude towards Islamic banking in Pakistan. Background of the Study Islamic banking has been extensively studied since the 1970s. Islamic banking system was introduced in Pakistan in 1977-78. Eliminating interests from spec operations...... middle of paper ......ce, G. (1999). Islamic ethics and implications for business. Journal of Business Ethics, 18 n. 4, 345-358 Sources of Islamic law. (n.d.). Wikipedia. Retrieved February 27, 2010, from http://en.wikipedia.org/wiki/Sources_of_Islamic_law State Bank of Pakistan. (2009). Islamic banking bulletin. Islamic Banking Bulletin, 4 no. 3, 1-21 Usmani, M. T. (1998). An introduction to Islamic finance. Karachi: Idaratul Ma`arif. Usmani, M. I. A. & Zubairi, Z. (2002). Meezan Bank's Guide to Islamic Banking. Retrieved February 26, 2010, from http://www.meezanbank.com/pages.aspx?iPageID=177 Venardos, A. M. (2005). Islamic Banking and Financial System in Southeast Asia: Development and Future. Singapore: World Scientific Publishing Society, Incorporated. ISBN: 9789812561527 9789812569394 Zaher, T. S., & Hassan, M. K. (2001). . Markets, institutions and financial instruments, 10 n. 4, 155-199