Digital waqf is one way to donate money for worship purposes via internet platforms based on the concept of waqf in Islam, which means dedicating property or assets to Allah. Digital waqf has a lot of potential for developing the Muslim community, but it is not without facing some legal issues and challenges in Malaysia. This study examines the legal status of digital waqf in Malaysia. It identifies current issues and challenges arising from the non-uniformity of waqf laws across the states, the uncertainty of the legal status of waqf, the ambiguity of the legal status of digital waqf, the absence of adequate verification of digital waqf, and the inefficiency in the administration and management of both waqf and digital waqf. This study uses qualitative methods with literature review methods for the data collection. Data from various sources, including journals, books, and online data related to the digital waqf in Malaysia, were analysed using content, inductive, and deductive analysis. This study found that the issues and challenges hinder the potential and impact of digital waqf and immediate and effective solutions are required to improve the situation. The study suggests several solutions, such as harmonising waqf laws according to the states, clarifying the legal status of digital waqf, improving digital waqf authentication, enhancing the administration and management of digital waqf, using crowdfunding platforms to raise digital waqf funds, using mobile applications to facilitate digital waqf, and using blockchain systems to increase the security and transparency of digital waqf. This study concludes that immediate action is needed to formulate sustainable policies and laws to overcome the challenges and enhance digital waqf’s governance and efficient management.