The degree of exchange rate shocks that are passed through to prices is one of the central questions in international economics. This research work investigates the empirical evidence on nonlinearity of exchange rate pass-through into inflation for Pakistan. Smooth transition regression is used to model the nonlinearities in exchange rate pass-through with respect to different transition variables which could potentially influence exchange rate pass-through. The estimation results suggest that the exchange rate pass-through has asymmetric relationship with inflation, exchange rate, output growth, and macroeconomic instability. Supervisor:- Dr. Wasim Shahid Malik