The paper deals with the encounter and ensuing responses that can be traced between Buddhism and Islam, during their centuries of contact across Asia (Anatolia, Iran, Central Asia, India), and more recently in the West. Within this panorama of history certain immediate overtly negative images of the other can be perceived in both traditions, manifested in terms of actions and literature. However some more positive images seem to have crystallised in Islam, particularly and significantly within the mystical Sufi streams that emerged in the East Iranian and Central Asian lands. Such historical patterns of confrontation, convergence and mysticism lead into the more modern second part of the study. A geographical-political perspective is first used, as the variations in their relationship in the various countries of SE Asia, and the British situation are noted. This is followed by a review of potential approaches between Islam and Buddhism in the current inter-faith dialogue arena. Whilst some doctrinal areas may be reconcilable (according to Cleary), it is primarily in other areas that more promising avenues of approach may be discerned. One is the area of ethics and social action on issues of common concern, as suggested by figures like Badawi, Gilliat, Askari and Vajiragnana. Another one is in contemplational areas of mysticism, as acknowledged by figures like Idries Shah. In both areas this can be echoed in greater clarity in the Christian-Buddhist dialogue. A further implication may be to bring out the need to view religions in functionalist and transformational terms, rather than culture bound doctrinal norms.