The purpose of this study is to examine the impact of Islamic Banks and Takaful on economic growth of Pakistan. Using panel data from 2009 to 2014 of five Islamic Banks and five Takaful Companies, and taking Gross Domestic Product (GDP) as dependent variable, Total Deposits (TD) of Islamic Banks and Total contribution (TC) of Takaful companies as independent variables, analysis is done to find the impact of Islamic Banks and Takaful companies on the economic growth of the country. The study employs Fixed Effect Model for the econometric analysis. The study concluded that there is a significant role of Total Deposits of Islamic Banks and Total Contributions of the Takaful Companies in the growth of the economy. It is thus, recommended that Economic policymakers should take into account this valuable fact and should take serious measures for facilitating Islamic Financial Sector. This research can be used as a platform for the economic policymakers to evaluate and comprehend the importance of Islamic Financial System in developing countries like Pakistan.