This research is about the examining Islam as a system for peace-building and coexistence. Allāh has created this universe on the basis of calm, and co-ordination. The purpose of this creation is that human beings can inculcate peace-building and harmony with full charms and colors. Islam has provided a solution for the whole world to establish peace, and co-ordination in the world. The basic Islamic rule is to create such a world in which human beings forget their problems and hardships of their sordid real life and try to lead a peaceful and harmonious life. Islam helps the man to shed his personal discriminations and deals with tolerating, respect other‟s views, ideas, liking and dislikings to face diversity. Islam promotes piety, goodwill, sympathy, tolerance, and groom human personality to eradicate evils such as wrath, bloodshed, cruelty, barbarism, and savageness. A true Muslim cannot even think evil for others rather he will prove himself the most beneficial, helpful and tolerate person among other people in every aspect of his life i.e: moral, social, economic and political etc. Islam imposes many responsibilities upon the Muslim in order to develop a universal harmonious society so that human beings can lead a life that fulfills Allāh‟s demands on them. Islam compels believer to demonstrate tolerance for peace-building, co-ordination, and co-existence in their lives so that they can encounter the evils, adversities, and cruelties of life which can weaken belief and distract the believers from the right path.