The classical Islamic division of the world into dar al-Islam (the abode of Islam) and dar al-harb (the abode of war) has long been treated as a foundational doctrine of Islamic international law. Yet a systematic examination of the primary sources reveals a critical anomaly, these terms are absent from the authenticated hadith corpus and only crystallized as juridical categories between the 2nd and 4th centuries AH, as tools of Abbasid imperial administration rather than expressions of prophetic ethics. This article therefore, aims to trace the genealogy of this dichotomy in classical siyar literature and to redefine it based on prophetic ethical principles derived from the Hadith, offering an alternative paradigm more compatible with the Maqasid al-Sunnah. This study employs two complementary methods: a historical-genealogical analysis of al-Shaybani's al-Siyar al-Kabir and al-Sarakhsi's Sharh al-Siyar al-Kabir to deconstruct the imperial logic of classical territorial constructions; and a thematic reading of the Hadith using the Maqasid al-Sunnah approach as formulated by al-Qaradawi, operationalized through three sequential procedures: situating each hadith within its historical causes and circumstances (asbab al-wurud); distinguishing the contextual means (wasilah) from its permanent ethical goal (hadaf); and verifying the original meaning of key terms within their 2nd-century AH socio-legal register. This method yields four permanent prophetic principles: 'adl (justice), wafa' bi al-'ahd (treaty fidelity), aman (security), and sulh (peace), which form the normative basis of a new paradigm: fiqh al-'ahd wa al-akhlaq (jurisprudence of covenant and ethics). This paradigm reconceptualizes Muslim-non-Muslim relations not through territorial identity, but through ethical conduct and covenantal commitment, a framework demonstrably more consistent with both the prophetic Sunnah and the modern international system than the imperial-era dar dichotomy it replaces.