Islip Terrace is a hamlet and census-designated place (CDP) in the Town of Islip in Suffolk County, New York,United States. The population was 5,389 at the 2010 census.According to the United States Census Bureau, the CDP has a total area of 1.4 square miles (3.5 km2), all land.
In 1914, a New York City real estate agent developed houses in the woods between East Islip and Central Islip State Hospital. Many who worked in the hospital lived here. The hamlet was originally called Germantown to attract people of German origin, but was renamed Islip Terrace because of German involvement in World War I.