Islamic banking in conventional financial markets in Tanzania reveals its ability to sustain operations and respond to constraints within existing legal and regulatory framework that inadequately accommodate its distinct operational needs. The status quo has triggered the study to examine how Islamic banks manage to survive and remain competitive. The study employed a qualitative approach, using doctrinal and empirical methods to collect data. The information gathered was analysed through legal formalism and content analysis methods. The findings reveal that Islamic banks in Tanzania have adopted resilience strategies to sustain operations. These include reliance on international Shariah standards, structuring and restructuring Shariah-compliant products, issuance of Islamic bonds, forming strategic partnerships for liquidity support, application of the doctrine of necessity, utilising Takaful insurance, establishing reserve accounts for profit distribution management, and imposing Ta’widh and Gharamah on late payments. Despite these strategies, the findings show that improvement of the legal and regulatory framework to effectively accommodate Islamic banking is essential to support fair competition. Therefore, the study recommends amendments of banking laws in Tanzania to adequately accommodate Shariah-compliant financial practices. Such reforms are crucial to support and strengthen Islamic banking and promote stability in financial markets.