This study attempts to investigate the effect of foreign remittances on human capital in Pakistan. We have considered two main components of human capital, education and health. Education was measured through enrollment in four levels: primary, middle, secondary and post-secondary. Health was measured through life expectancy. We have estimated health and education production functions based on the ground of Grossman (1972) theoretical model and Fayissa and Gutema, (2008) health production model. The empirical analysis is based on time series data for the period 1973-2014.We have estimated the impact of foreign remittances on human capital using Autoregressive Distributed Lag (ARDL) approach. The results show that the impact of foreign remittances on primary and middle school enrollment is positive in long run but negative in short run. However, the impact of foreign remittances on secondary school enrollment is negative in long run but positive in short run. The effect of foreign remittances on post-secondary school enrollment is insignificant for both in long run and short run. The effect of foreign remittances on life expectancy is positive for both short run and long run. These results suggest that importance of remittances cannot be ignore specially in developing countries like Pakistan, so that Government of Pakistan should focus on raising the awareness of investing more remittances to improve human capital. Supervisor: Dr.Ghulam Mohammad Arif