This study aims to analyze the role of product innovation in Islamic financial institutions in strengthening the economic stability of society. The rapid development of Islamic financial institutions requires adaptive, inclusive, and sharia-compliant product innovation. This research uses a descriptive qualitative approach with a literature review method, examining various sources such as academic journals, books, and institutional reports. The findings indicate that innovation in Islamic financial products, including profit-sharing financing schemes, sharia-based digital services, and community-oriented financial products, significantly contributes to increasing financial inclusion, strengthening micro, small, and medium enterprises (MSMEs), and reducing economic disparities. Furthermore, these innovations play a crucial role in maintaining economic stability through a fairer and more sustainable financial system. However, several challenges remain, including low levels of Islamic financial literacy and limited infrastructure. Therefore, collaboration between financial institutions, the government, and the community is crucial to optimize the role of product innovation in supporting economic stability
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