The paper proceeds with the short introduction of interfaith dialogue. Terminologies such as al jadl, al mufawadhat, al hîwar al mûhajah, and al hâdith etc. that are being used by the Muslims for the notion of dialogue   have also been elaborated. The thoughts of contemporary Muslims scholars involved in interfaith dialogue reveal   that dialogue as conversation between the representatives of religions with the aim of developing understanding and harmony is in accordance with Islamic teachings. The Da’wah, which involves knowing, learning   and persuading each other, is also kind of dialogue. Disagreements of nations are diversities from which need for dialogue emerges. Such type of prospects and benefits of interfaith dialogue particularly in Muslims’ perspective have been traced then. Islamic concept of religious diversity, which is based on recognition of almost all pre Islamic Religions, has been elaborated in third part of this paper. No compulsion in choice of faith is core of Islamic belief. Muslim Jurists are agreed that freedom of choice of faith is basic ingredient of conversion. Conversion by force and coercion is null and void. This has been discussed in forth part of this study. The fifth part of the study deals with interfaith tolerance and respect. The last part of the study consists upon miscellaneous rules that regulate the conduct of interfaith dialogue. In conclusion of this paper importance of inter religious dependence and possible role of framework of interfaith dialogue in the light of al-Sharî‘a al-Islâmiyyah have been identified so that Muslims can actively and positively contribute for peace among religions through dialogue.