Many approaches and tools have been utilized throughout the globe by public and private sector organizations to curtail the deprivations and enhance welfare of the poor. Islamic Microfinance is one of them and is rapidly getting popular in Muslims as well as non-Muslims majority population countries. This study was conducted to gauge the impact of Islamic microfinance on the household welfare of the target clients by observing its impact on health, education, income, expenditures and assets of the poor who took loan from Islamic Microfinance institutions (IMFIs). Study is based on primary data and assessment was made rendering pre and post project approach by employing paired sample t-test and Regressionanalysis as statistical tools. Respondents were selected from three microfinance institutions, namely Akhuwat Foundation, Farz Foundation and NAYMET. Results delineate statistically significant differences in Pre and Post borrowing scenarios in the welfare indicators of the target households. It has been observed that borrowing from Islamic Microfinance institutions has not only significantly raised monthly income; expenditures on food, education and health; and incremented households’ assetsbut also surprisingly raised borrowed amount of loan which negatively affected income. This requires some further investigation and it is recommended that practitioners and policy makers must keep IMF on its top agenda to enhanceliving standards of the poor in developing countries.