The great enigma of existence of so much suffering and moral evil in the world and its religious significance has been among the most important and difficult problems of religion. The problem of suffering, moral evil, waste, death, meaninglessness, absurdism, the "silence" and "absence" of God has been a common problem for religion , philosophy and great art and literature, especially during modern times which are characterized by extreme obtrusiveness of evil. Modern man cites this as one of the major reasons for his disbelief in religion, especially in traditional theism. Pessimist and nihilist tendency of much of modern thought which has a negative bearing on religion is attributable to faulty appropriation of the problem of evil. Traditional Christian theistic answers to the problem are increasingly felt to be inadequate and unconvincing. What is surprising is that Islam's unique theological and metaphysical resources have been largely ignored in tackling the problem of evil by both Muslim and non-Muslim scholarship. There is great dearth of comprehensive and systematic work on Islam's perspective on the problem of evil. The present study is an attempt to present and also reread traditional Muslim theological and metaphysical perspective on the issue and thus fill the vacuum. After a brief critical survey of modern response to the existence of evil and traditional Muslim theological approaches to the same it discusses in detail modern Muslim philosophical approach as presented in the writings of Iqbal - one of the most important philosophers of modernist Islam who alone amongst the great Muslim intellectuals of Indian subcontinent has seriously reckoned with the problem in contemporary language. There has been no systematic study of Iqbalian position on the problem of evil. This has contributed to certain misunderstanding and confusion in general Iqbalian studies. The present study is a critical evaluations from modern as well as traditionalist perspectives, of Iqbal's attitude towards this important theological problem. It is the perennialist or metaphysical approach to theodicy that forms the background as well as provides the critical lens through which modern secular as well as modernist Muslim responses to the problem are evaluated.