A Dissertation Submitted to Mzumbe University, Dar es Salaam Campus College in Partial Fulfillment for the Requirements for the Masters Degree in Business AdministrationThis study was done at NBC Bank head offices. A sample of 50 respondents comprising of the Branch managers, Investigators and bank clerks of the NBC Bank were interviewed. The objective of the study was to assess the influence of internal fraud to the performance of commercial banks in Tanzania. Specifically the study intended to determine the extent of internal fraud in commercial banks in Tanzania, to investigate efforts taken by the banks in preventing and detecting internal fraud, to determine the effectiveness of internal controls in tackling internal fraud in Commercial banks in Tanzania and to determine employee’s awareness in internal fraud issues and its effects in commercial banks in Tanzania. Case study design and qualitative research approach were used during the study. In collecting information the study used questionnaires and observation to collect primary data while secondary data was collected using documentary sources. The findings indicate that the speed of internal fraud in banks is high and the bank has been highly affected by these fraudulent activities. This negatively affects the performance as well as the growth of commercial banks in Tanzania. The findings also indicate that internal fraud are being accelerated by several factors such as week internal controls, understaffing, law pay packages, weakness in personnel and recruitment policies and ineffective internal auditing. However the finding also indicates that a good number of fraudulent activities go undetected. The findings also indicate that NBC has been increasing its efforts toward preventing and detection of internal fraud which includes Establishment of whistle blow channels and contact center, the fraud awareness campaign, screening process and name and shame broadcast. The findings also indicate the following recommendations that can help NBC to overcome the problem of internal fraud and which should be put into action immediately; strong internal controls, hiring of enough and competent staff, effective auditing and salary review for bank staff.