This study explains the effect of exchange rate fluctuation on firm profitability of energy sector of Pakistan. The energy sector of Pakistan is consisted on oil and gas marketing companies, oil and gas exploration, refinery and power generation & distribution companies which arc listed in Pakistan Stock Exchange (PSX). The 10-year data is collected form the period of 2008 to 2017. Firm profitability is measured by Return on Assets (ROA), Return on Equity (ROE) and Return on Capital Employed (ROCE). While Real Effective Exchange Rate is used as measure of Exchange Rate fluctuation. To sec the effect of Exchange Rate Fluctuation on firm profitability more accurately, this study includes some control variables which are firm specific and industry specific variables. The study is based on panel data analysis. The result of regression analysis revealed that exchange rate fluctuation has significant and positive effect on firm profitability. Firm specific variables firm size and liquidity is insignificant, though leverage, tangibility and firm growth showed significant effect to firm profitability. On the other hand, industry specific variables such as Share of investment in Energy Sector and industrial growth showed significant and positive effect to firm profitability. In accordance with result it is proved that the movement in exchange rate has positive effect on energy sector firm’s profitability.