This article analyzes recent transformations of Islam in Pemba City in northern Mozambique from the perspective of Islam’s moral economy. Significant changes with regard to Islamic conceptions and practices, affecting both African and Indian Muslim communities of the city, began taking place following the arrival in the city of a transnational Islamic NGO, the Africa Muslims Agency (AMA) in 1987. A new generation of Islamic leaders emerged and confronted their elders with the purpose of "correcting" local Muslim life, and promoting a stricter adherence to the Qur’an and Hadith. The changes in the moral economy of Islam went hand-in-hand with these changes.