The objective of this study is to develop a model of human capital from Islamic point of view. The study was conducted using qualitative research that involved 15 Muslim SMEs in Malaysia through focus group discussion as data collection. The data were then transcribed verbatim and analyzed using NVivo application. Empirical findings from the study show that mentoring process such as the display of prudent characteristics, integrity development and preferred leadership style among youth leaders lead to character development. In conclusion, the data indicated that mentoring clearly had the potential to constitute the process of character building among youth. This youth leadership mentoring process contributes to the development of their capabilities in leadership and enhances the implementation of effective youth leadership mentoring processes.