The Arab Muslim traders and the native Tamil converts to Islam in Tamil Nadu state of India, and Sri Lanka came into closer contact as a result of their commercial activities. They were bound by a common religion, but separated by two different languages. They felt the necessity for a link language. They started to write Tamil in an adapted Arabic script called Arwi. From eighth century to nineteenth century, this language enjoyed its popularity among Tamil speaking Muslims of Tamil Nadu and Sri Lanka. The valuable and useful ideas of Tamil Muslim minds were conveyed in Arabicized Tamil called Arwi. It rendered a most useful service for the advancement and progress of Arab and Tamil cultures. However, the beginning of the twentieth century saw the decline of this language. And no step was taken to arrest this decline. Computational Study of Arwi Language was analyzed in this article with Its Encoding Issues and Solutions with Special Reference to Unicode.The issues and challenges in encoding Arwi can be solved by adopting Unicode characters to type Arwi language .Today the printing system needs such encoding solutions, in order to make the task of printing easier one.