The main objective of this study was to assess the effectiveness of performance appraisal system in evaluating employees‘ performance at Mwanza City Council. In order to address the main objective, this study specifically aimed: to assess employees‘ perceptions of performance appraisal system at MCC; to examine the objectives of performance appraisal system at Mwanza City Council; to assess the effectiveness of performance appraisal system at Mwanza City Council, and to examine the challenges of performance appraisal system at Mwanza City Council. A researcher used a case study design. The total number of respondents was 353, who included staff working in different departments, sections, and units at MCC. Primary data were collected through face to face interview, observation, and questionnaires. On the other hand, secondary data were obtained through academic journals, book reviews, official annual reports, previous OPRAS forms, internet, and newspapers. The findings of the study indicated that supervisors are not well trained, the OPRAS itself is not well understood, lack of integration between individual objectives and that of the organization, unfair evaluation among public employees, and lack of proper selection of performance indicators. The study also found that; employees believe that employers are not objective in undertaking the OPRAS exercise and again they do not believe that the appraisal exercise has any positive impact on their performance. The researcher recommended that there should be adequate training of the employees on OPRAS allocation of performance appraisal budget, proper selection of performance indicators, focus on fair employees‘ appraisal and adherence to the appraisal laws and regulations to make performance appraisal effective and productive