This study focus on the Microfinance and poverty allegation in district Bahawalnagar, this study is first time conducted in district Bahawalnagar. Microfinance is a key strategy for poverty alleviation. Inadequate access to credit by the poor has been identified as one of the contributing factors to poverty. Microfinance’s achievements in poverty reduction have been celebrated worldwide. This study conducted on primary data collected from district Bahawalnagar. This study is focus on contribution of Microfinance on poverty allegation. Three proxies (Basis needs, Living standard, and usage of Microfinance) are used to measure the performance of Microfinance it measure through cross step and regression analysis, result shows that 80% respondents are male, and result shows that mostly respondents are under matric. Regression analysis show the positive relationship between dependent and independent variables, Model summary table shows that 43.9% of Basis need explained by microfinance, 36.7 % Living standard explained by microfinance, and 75% usage of microfinance explained by microfinance. All over the SPSS shows positive relationship dependent and independent variables. So in the light of this study it is suggested that Microfinance should focus on workshop and tanning session before issue the credit, because mostly population of District Bahawalnagar under matric they need entrepreneur skills and knowledge and The loan amount may not be fixed and the amount of loans may be given accordance to the capital requirement of business. The loans amount may not be overestimated and not under estimated for smoothness of business. As the overestimated amount is being misuse by the customers and underestimated amount become a cause of business failure. It is concluded that working on poverty alleviation is the key part of the success of the microfinance. Supervisor: M.Ali Kemal