Islamic boarding schools (Pesantren) are not only social and educational institutions but they should also able to develop prosperity for their students and alumni as well as their respective community. Therefore, it is important to work on the empowerment of Pesantren for their harmonization and deradicalization. The current study used Participatory Action Research method. Data was collected through observation, documentation, interviews, and focus group discussions. The selection of informants was purposive and they comprised boarding school administrators, students, community groups, activists, practitioners and experts. Study locations were the Pesantren of Nurussalam in Ciamis and Al Idrisiyyah in Tasikmalaya, West Java Province and Al Muaddib in Cilacap, Central Java. The results showed that economic empowerment of Pesantren becomes strategic and important as a medium of harmonization and deradicalization between the Pesantren and the community. Therefore, it could ward off the stigma attached to Pesantren as closed, traditional, radical and even terrorist supporting institutions. Pesantren carry out social and economic empowerment in the early stages of building and increasing motivation, mindset and mental attitude, as well as interaction and cooperation. They continue to do it by designing and implementing programs in a participatory manner involving students, alumni and the community on entrepreneurial management, product improvement, and marketing in order to promote activities that are more concerned with health, environment and renewable energy.