Since independence, Tanzania has relied on international trade and foreign investment for integration into the global economy for the purpose of promotion of economic development. So it goes without the say that, Tanzania recognizes Foreign Direct Investment (FDI) among others, as a driver to economic development. FDI is made possible through international agreements with foreign governments, multinational companies and international institutions. The agreements come with terms and conditions, one being on dispute settlement mechanism. Tanzania has legal commitments and obligations to fulfill under international investment arrangements. International investment agreements include both Bilateral and Multilateral Investment Treaties (BIT‟s and MIT‟s), Free Trade Agreements (FTA‟s) and other economic cooperation which incorporating investment provisions. For instance, Tanzania is a member of the Multilateral Investment Guarantee Agency (MIGA), and a signatory to the International Centre for Settlement of Investment Disputes (ICSID) since 1992. Tanzania has concluded several International Investment Agreements (IIA‟s) through Bilateral Investment Treaties (BIT‟s) and Chapter of Free Trade Area (FTA) commitment at regional level namely; The Kigali Declaration signed under the agreement establishing the African Continental Free Trade Area (AFCTA) and its obligations under East African Community and South African Development Corporation. The main objective of this research is to make an analysis on the legal framework on investment with special reference to an appraisal of the Investor–State Dispute Settlement Mechanisms in Tanzania. On the other hand the specific objectives are to understand concepts, principles and theories on investment and investor- state dispute settlement, to identify any potential conflict(s) between national law and obligations under Multilateral and Bilateral Investment treaties on Investor-State Dispute Settlement and to propose suggestions on possible ways of overcoming concerns of ISDS in relation to the state‟s obligations under international investment law.