This paper provides a brief overview of Turkey’s soft power in Austria through the example of the faith-based public diplomacy institution ATiB (Avusturya Turkiye islam Birligi, Turkisch-Islamische Union in Osterreich), a branch of the Presidency of Religious Affairs of Turkey (Diyanet isleri Baskanligi). It addresses the significance of ATIB with regard to the religious and cultural needs of the Turkish Muslim community in Austria and the negative perceptions of Turkey’s soft power strategy in this country. The paper also focuses on the current challenges faced by the ATIB, as well as by Austria’s Muslim community in general, as a result of the Law on Islam that was adopted in 2015 (Islamgesetz 2015) and the accompanying discussions around Muslim associations financed from abroad. The research design is primarily based on a critical discourse analysis of political and academic debates about the ATiB, the 2015 Islam Law, and their catalyzing effect on Islamophobia in Austria.