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Recent scholarship documents the criminalization of Muslim immigrants in Europe and the United States stemming from a counter-terrorism inspired moral panic and the securitization of immigration. Much of the existing literature offers descriptive accounts of discrimination and anti-Muslim politics, but neglects to theorize how the processes of criminalization has developed in the years following 9/11. Past research also fails to theorize the mutli-scalar dimensions through which anti-Muslim policies are manifested. Using the case of stigmatized Pakistani Muslim non-profit organizations, this paper proposes a new conceptual process model of Muslim criminalization. The theoretical process model demonstrates how moral panics surrounding terrorism generate multi-scalar ethnoracial stigmas. This stigmatization creates the conditions for the institutionalization of the ethnoracial stigma in official policies. Data supporting the model are gleaned from 131 in-depth interviews with leaders and members of Pakistani Muslim immigrant non-profits, government officials and other key-informants. This paper contributes to the literature on the criminalization of ethnoracial minority group by offering a new approach for theorizing the process and relationship between moral panics, stigmatization and institutionalized discrimination.