This study examines the effect of the quality of Islamic financial services and customer knowledge on perceived value and customer satisfaction, with religiosity playing a moderating role. We particularly focus on Pakistan’s small and medium-sized enterprise sector. We develop our hypotheses based on a detailed review of the literature on select variables. A series of questionnaires allow cross-sectional data collection from 511 customers using Islamic financial services within the small and medium-sized enterprise sector. The Pearson’s correlation tests the direction and effectiveness of different variables. A regression analysis examines the direct relationship among variables, while a bootstrapping method analyses the indirect relationships (mediation and moderation). The results reveal that product quality and customer knowledge directly affect perceived value and customer satisfaction. Further, the perceived value of Islamic financial products/services positively affects customer satisfaction. The results of the indirect hypotheses reveal that product knowledge and product/service quality are mediated through the perceived value of their effect on customer satisfaction. All relationships are tested for the interaction of religiosity, revealing significant results. As per the moderation analysis, higher religiosity of customers leads to more positive perception of the products/service, and thus higher customer satisfaction. These results could be useful for financial product development and for the State Bank of Pakistan’s growth of Islamic financial services.