Firms use derivatives to reduce overall financial exposure, which leads to better performance. Even though shariah-compliant firms have risk management systems built in, they are exposed to several risks due to counterparty transactions. Those counterparties may not use shariah as a benchmark. This chapter aims to empirically investigate the relationship between the impact of derivative usage and firm value in the context of shariah-compliant firms in Malaysia. A sample of 200 non-financial firms covering the sample period of 2011 to 2016 was employed. As the sample period covers the oil shock, which occurred in 2014, this paper empirically tests the impact of derivative usage on firm value in different phases of the economic cycle in the Malaysian context. Firm value is measured using Tobin’s Q, and the use of derivatives is an independent dummy variable. Overall, the paper concludes that the use of derivatives does not have a statistically significant impact on firm value in the Malaysian context. In the pre-crisis period, firms were valued negatively, while the value reversed to positive during the crisis period.