Dissertation (MA Education)The study assessed the utilization of capitation grants in public primary schools in Iringa District. Specifically, it examined the disbursement procedures of capitation grant from Central Government to schools, to understand how capitation grants are utilized in schools, the study was extended into exploring the challenges facing school management in utilizing capitation grants and its implications to quality education and finally suggested strategies to rectify the situation. The study employed qualitative approach with some elements of quantitative approach. The data was collected by using questionnaires, interviews, documentary review, and focus group discussion, qualitative data were analyzed thematically and presented through descriptions and quotations and quantitative data were analyzed through SPSS and presented through descriptive statistics. The study revealed that disbursement procedures of capitation grant to schools involve many stages that are bureaucratic and that there are unnecessary delays of CG to reach pupils. Likewise, uses of CG without adherence to government regulations provide greater chances to head teachers to spend more funds into issues which are unrelated to the process of teaching and learning in schools. Further, the study found that the challenges associated with managing CG in schools, such as delays, insufficiency and inadequate knowledge of HTs on fund management negatively affected the quality of education in public primary schools in Tanzania. To remedy the situation, the study suggested some strategies such as provision of training to head teachers, more sources of fund should be sought to minimize dependency on CG and the Government should increase amount of CG. The study recommended that there is need to revise the delivery mechanism of CG from Central Government to the school level so that the funds may be deposited directly into schools accounts.