The establishment of the so-called Baitul Maal wat Tamwil (BMTs) in the form of an Islamic microfinance (IMFI) is intended initially to effectively help the poor. At present time there are around 3,874 BMTs operating around the country. Although the BMTs have been existing since more than ten years ago, yet no research has been conducted to examine their effectiveness in alleviating the poverty. This study in aimed at fulfilling this important gap. The case study approach on BMT MMU Sidogiri (located at East Java Province) is taken. The paper goes beyond data measurement using descriptive statistics, paired t-test and some poverty measurement indexes such as headcount index, poverty gap, Sen index and and Foster, Greer, and Thorbecke Index to investigate the effectiveness of the BMT in reducing poverty. The study reveals that BMT financing is effective in reducing poverty. Most of respondents can increase their income after receiving BMT financing. Products of the BMT especially BBA and mudarabah to empower the poor in various productive business have been able to reduce extent and severity of poverty.