Abstract : This article explores the integration of the third economy within the Malaysian context, emphasising the Islamic economy, third sector, generosity, and sustainability. The objective is to examine the historical background and potential of the third sector for future growth. Using historical and descriptive analysis methods, the study examines the contribution and how the third sector benefits from Islamic economic principles, particularly those rooted in generosity and social welfare. The findings indicate that components of the third sector, such as social enterprises, non-profit organisations, and community groups have contributed to economic resilience and significantly impacted the Malaysia’s socioeconomic landscape. The study highlights the potential for further growth and integration of the third sector in Malaysia, proposing that its alignment with Islamic economic principles can enhance sustainability and equitable development. By offering insights into the third sector’s role in Malaysia’s, this article provides recommendations for policymakers, academics, and practitioners aiming to foster sustainable economic development through the third sector.