The main objective of this study was to assess the effects of performance contracting on public service delivery in Kenya. The study employed descriptive research design. The target population was employees in Ministries and Departments that had adopted performance contracting between 2005/06 to 2008/09. The study employed systematic random sampling and purposive sampling methods to get the sample size. Questionnaires were the main instruments for collecting primary data. The data was analyzed with the help of the Statistical Package for Social Sciences (SPSS) for Windows and Ms Excel. The study concludes that performance contracting had provided an appropriate framework for guiding the behavior of public officials towards achievement of results thus contributing to significant improvement in public service delivery. The study also concludes that the mechanism used to measure the level of performance improvement is complex for comprehension by most employees. The study further concludes that performance contracting strategy has not been sufficiently devolved within public institutions to ensure effective participation by employees at all service delivery levels. The study recommends that performance measurement mechanism should be reviewed and simplified to ensure it is well understood and applied effectively. The study also recommends that performance contracting should be devolved to all service delivery levels and all employees should be sufficiently involved in decision making process. The study further recommends that effective measures should be taken to stem corruption.