It is extremely important for every Muslim to refrain from dealing with interest and usury at all time.
Taking and giving of interest is strictly forbidden in Islam. There is a multitude of Prophetic Hadith describing the punishment of those who deal with interest (Riba).
A Masjid is the house of Allah and every effort should be made to ensure, it is established with pure and Halal funds and no doubtful or unlawful funds are used in its construction and maintanence.
It is not permissible to build a Masjid with Haram (unlawful) funds. However, if a Masjid has already been built with the usage of such funds then it is obligatory upon every Muslim to respect it and protect it.
It is not only permissible to offer Prayers therein but it may be necessary not to abandon the Masjid by not establishing the Prayer there.
Those who made such contributions and those who accepted such contributions knowingly must repent to Allah sincerely and seek His forgiveness.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America
2 Muharram 1432/ December 8 2010