This study aims to analyze the invalidity of contracts based on criminalization within Islamic jurisprudence, Iranian law, and Egyptian law. It examines the foundations, elements, and effects of contractual invalidity from a jurisprudential perspective, as well as its criminalization under the penal systems of Iran and Egypt. The findings indicate that in Imami jurisprudence, and consequently in Iranian law, invalidity and defectiveness are generally considered synonymous. Whenever a religious prohibition pertains to the essence of a contract, that transaction is deemed defective and therefore void. Articles 190, 217, 365, and 366 of the Iranian Civil Code regard the legitimacy of the cause, compliance with the conditions of validity, and conformity with public order as fundamental elements of contracts. Moreover, the criminalization of unlawful transactions in Iranian law represents a modern manifestation of religious prohibition and serves as a tool for preventing economic corruption. In the Egyptian legal system, contractual invalidity is likewise grounded in Islamic Sharia, while also being influenced by the Romano–Germanic legal tradition. Articles 136 and 142 of the Egyptian Civil Code consider invalidity to be the result of the absence of a lawful cause or conflict with public morals and public order, reflecting a form of equivalence between defectiveness and invalidity of contracts and ultimately leading to the criminalization of defective and void transactions. This comparative study demonstrates that Iran places greater emphasis on jurisprudential and customary foundations, whereas Egypt adopts a hybrid approach that also takes into account the moral and economic dimensions of invalidity.