In general, it refers to all sale transactions that are executed on a commercial basis (i.e., for the sake of profit). In more specific terms, mutajarah includes the activities of buying a certain object (commodity, asset, etc) with the intention of selling, typically for halal profit. The profit is the difference between the sale price and purchase cost. In this sense, mutajarah involves the use of capital for the purpose of making profit. This will result in possession being transferred from the seller to the buyer at the time of contracting. The profit is included in the price and becomes an integral part of the value of underlying items (object of sale). Mutajarah is either immediate (spot) or forward (for a medium term).

In its narrower meaning, mutajarah refers to an agreement whereby an Islamic bank agrees to provide goods needed by a client on an immediate payment basis. In this sense, mutajarah is very similar to immediate murabaha (though in mutajarah, and contrary to murabaha, the seller is not required to reveal the original cost of acquisition).