This paper attempts to explain the existence and institutionalization of Islamic law in Indonesia. The first part of this writing explores the existence of Islamic law which is perceived in two big periods, the pre-independence period and the post independence period.  In the following part, the author focuses the dynamics of post-independence period by showing momentum in 1970 when the state officially  acknowledged religous court as a separate entity to become  one of  fully sovereign courts in the judiciary.  The main argument of the paper is that the state policy has allowed a room for Islamic law to emerge and exist, although the religious court at that  time only dealt with civil law in the area of family law for indonesian muslims. Institutionally, Islamic law has been recognized as a sub-system in the national law system. Furthermore, society’s awareness of the Islamic law is developed significantly due to the role of Muslim intellectuals and Muslim scholars who actively promote society’s awareness of the law.