Rapid economic development since the mid-1970s has caused some segments of the Malay intelligentsia in Malaysia to rework aspects of their cultural heritage, in particular, Islamic teachings and philosophy, to create new cultures and new identities. In Sungai Pencala, a suburban Malay community that had undergone considerable social transformation and been exposed to Islamic resurgence, two such tendencies were discernible. The first was associated with the banned Al Arqam movement and the second, with state-sponsored agencies. Proceeding from a conviction that existing identities based on the family, kin groups and locality had to be deconstructed, the Al Arqam movement engaged in a project aimed at forging a group-centred identity through a commune-based living pattern and linking that identity firmly with that of the Middle East. The state's agents, on the other hand, merely sought to modify the existing loyalties so as to produce Malays who would continue to regard the family, community, locality and the nation as important contexts within which they could acquire their ethnic and religious identities. The paper argues that the contrasting tendencies in identity reformulation in Sungai Pencala have much to do with the differences in the way Islam has been used to promote the religiously-expressed interests of certain groups as with the fate of the increasingly differentiated urban-based Malays.