Dissertation (MA Public Administration)Apparently, the government of Tanzania has engaged various actors in public service delivery. Some studies have indicated that the engagement of private sector in service delivery has inevitably increased efficiency and effectiveness of this process. The situation is controversial and in fact raises a need to study the extent to which public receive better services after engagement of the sector. This study aimed at investigating the challenges and prospects of private sector engagement in public service delivery. Specifically, the study examined status and dynamics, contributions and potential prospects of private sector engagement in public service delivery. This study employed cross sectional as research design and sample size was 45 respondents: 35 were selected using simple random sampling and 10 by purposive sampling procedure. Questionnaire and semi-structured interview were used to collect primary data at DMC while written documents were consulted for secondary data. Findings of the study showed that status, dynamics and prospects of private sector in service delivery is recognized because of its importance in improvement of economy and well-being of citizens. However, the study found that there are both institutional and operational challenges that made the sector to operate inadequately in service delivery. The study recommended that government should review policies, laws and regulations to make them more comprehensive to facilitate the sector to have conducive environment to operate. Private sector should review its mode of operations in considering the situation of the citizens of both rural and urban regardless of their income status. The study concluded that private sector engagement in service delivery is potential to economic growth and well being of the people and cooperation of the sector with other actors is essential to improve the process of service delivery to the public.