A Dissertation Submitted in Partial Fulfilment of the Requirements for Award of Master of Science in Accounting and Finance (Msc A&F) of Mzumbe University.The objective of the study was to find out the effect of microfinance outreach on their profitability using some microfinance institutions in Tanzania as cases for the study. Tanzania was selected because, the country enjoys peace, political stability and also it is gifted with huge natural resources but the majority of its people especial the rural population lives in absolute poverty. The study used data of nine (9) microfinance institutions in Tanzania. The data was obtained from Microfinance Information eXchange (MIX) market. Data analysis was conducted using three simple regression models. Specifically, the study wanted to determine first, the effects of number of active borrowers on cost per borrower. Second, was to determine the effects of cost per borrower on the microfinance profitability. Finally, the study was set to determine the overall effect of number of active borrowers on the profitability of microfinance institutions. It was found that, the number of active borrowers is negatively related with the cost per borrower; the cost per borrower is positively related with the operational selfsufficiency; and the number of active borrowers is positively related with the operational self-sufficiency. That is, the increase in number of active borrowers results into decrease in the cost per borrower which in turn leads into increased profitability. Thus generally, the study concludes that the number of active borrowers has a positive influence on the profitability of microfinance institutions. Based on the study findings, the study recommends that in order for the microfinance institutions in the country to be profitable, they should ensure that they increase the number of active borrowers.