The Islamic Development Bank (IsDB) serves as a pivotal institution in fostering socio-economic development among Organization of Islamic Cooperation (OIC) member countries. Despite its significant role in providing Sharia-compliant financing, technical assistance, and capacity-building programs, economic disparities among OIC nations persist, raising concerns about the effectiveness of IsDB’s development initiatives. This study addresses the critical issue of how IsDB can enhance its impact in reducing these disparities while adapting to evolving global challenges such as climate change, digital transformation, and financial stability. This study analyzes the role, challenges, and opportunities of IsDB in addressing development issues through infrastructure investment, human capital development, and financial inclusion. Using a SWOT analysis approach, the study identifies internal strengths and weaknesses, as well as external opportunities and threats, that impact IsDB’s effectiveness. The findings indicate that while Islamic financing mechanisms enhance financial inclusion and economic resilience, challenges such as bureaucratic inefficiencies, reliance on member-state contributions, and diverse regulatory frameworks hinder IsDB's operational efficiency. To optimize its role, strategic policy recommendations based on the SWOT matrix are proposed, focusing on strengthening financial mechanisms, expanding partnerships, and fostering innovation. This study highlights the importance of adaptive strategies in ensuring that IsDB remains a key driver of sustainable development in OIC nations. Keywords: Islamic Development Bank (IDB), Socio-Economic Development, Organization of Islamic Cooperation (OIC)