In the aftermath of the September 11 attacks, the long and checkered relationship between Islam and the West entered a new phase. The sense of suspicion and denouncement that swept through the public sphere of many European countries and the United States was accompanied by major changes in governmental policies and a shift in the politics in each country that has witnessed or suffered from the repercussions of these attacks; this has been exasperated further by the rise of Islamic State (ISIS). This study uses different types of data sources and focuses on the previous academic work on establishing institutions of higher education within an existing unique context to examine the challenges that these institutions face on both the policy and political levels due to the prevailing current geopolitical climate vis-à-vis Islam. While focusing on the present and offering some insights into the future, this paper provides a base for a more comprehensive historical overview of the main policy changes by creating a timeline of key changes in the policies and mapping the significant events that have had an impact. It is designed to investigate challenges and opportunities of Islamic higher education institutions and programs from a policy perspective and within the changing political governmental agenda specifically in the United States, and it offers a preliminary analysis of the dynamics of these evolving transformations. Considering the emerging need to revisit these institutions and the more recent recurring calls to reform existing Western Islamic studies programs, this paper fills another gap in the literature by providing some recommendations.