This purpose of this study was to explore how Pharmaceutical inventory management leads to improved service level at Nyamagana Hospital. The study was guided by the general objective which was to explore howpharmaceutical inventory management leads to improved service level atNyamagana Hospital. The specific objectives were (1) to explore the inventory management practice in the pharmacy store at Nyamagana Hospital, (2) assess the record keeping practices and documents used for inventory control at Nyamagana Hospital, and (3) to explore the required education level in effective managing pharmaceutical inventories or assess management strategies on enhancing staff competence in inventory control of Nyamagana Hospitalmedical Center.The study adopted a qualitativemethodology whereby interview guide was used as tool of data collection. The study interviewed 8 workers in a hospital including nurses and office stores attendants. The responses were recorded and later on transcribed and analysed using thematic coding.Themes were generated from each research objective. The findings revealed that Nyamagana Hospital uses both manual and computerized inventory recording system. Various tools were used in record keeping including min-max inventory management system, three months order to MSD and twice per week order to main store. Finally, the competence level required for effectively management of pharmaceutical inventory, it was found to be the knowledge of both store keeping as well as pharmacy. Even though the respondents did not posses all these qualifications, the hospital had ensured to hire a combination of personnel involved in the management and dispensing of pharmaceutical inventories so as to minimize the problem of competence level. Finally the respondents revealed that there was a reported problem with batch inventory miss match, instability of the internet network system due to poor infrastructure on ICT and the problem of nearly expiring commodities. The study is important as it can provide information on management of pharmaceutical inventories which can be used by various organizations that deal in storing and dissemination of pharmaceutical products. The study recommends that the management of the hospitals should enhance staff competence for total computerized system application as well as for the effective inventory management practice through scheduled on job training coaching and job rotation.