Drawing on the lived experiences of the Pengkids and their girlfriends in the deprived district of the capital city of Malaysia, Kuala Lumpur, this article examines transgender practices and women's same-sex desires within the local contexts of urbanization and political Islam. This article questions the assumed marginal positions of transgender practices and same-sex desires in society, and provides a nuanced understanding of the politics of identity, gender, sexuality and religion involved in a Muslim country. While the Muslim-Malay sexual minorities are increasingly subjected to the threats of moral policing in Malaysia, Pengkid has become a new identity marker for the marginalized sexual subject framed by the Islamic discourse of this country.